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5 Top Stocks to Buy for the Labor Day Weekend

Tirthankar Chakraborty

This Labor Day weekend, the final summer holiday trip before another busy school season, is likely to see heavy traffic.

People are willing to travel long distances via cars or planes, thanks to increased financial confidence on a healthy labor market. This definitely calls for investing in the travel space around this time.

Expect Busy Skies & Roads on Labor Day

This Labor Day weekend is likely to be very busy. The Airlines for America (A4A) has projected a record 17.5 million passengers on U.S. carriers across the globe, reflecting a 4% increase from last year.

This will result in around 2.51 million passengers travelling on U.S. airplanes each day, a significant increase from last year. Aug 30 is expected to be the busiest, with an estimated 2.98 million flyers. In fact, during the Labor Day (Sep 2), a healthy 2.71 million passengers are expected to take to the skies.

In order to meet the spike in holiday travel, U.S. airlines have added nearly 109,000 seats per day to accommodate the additional 95,000 daily passengers expected during the Labor Day weekend. Lest we forget, U.S. airlines will be able to add such staggering number of seats despite the grounding of the Boeing 737 MAX.

Airlines have already provided inflation-adjusted fares this year, making traveling more affordable. Their on-time arrivals as well as departures, proper baggage handling and lesser number of complaints are encouraging more passengers to fly compared to last year.

Roads will be packed as well. According to the American Automobile Association (AAA), more number of travelers will be on the road compared to last year, while TripAdvisor claims that almost 61% will be driving, and another 27% flying.

What’s Driving Travel This Labor Day Holiday Season?

Consumers are pretty confident about their well-being and not afraid to spend this Labor Day weekend. According to the Conference Board, the consumer confidence index came in at 135.1 in August, and was way more than analysts’ expectations of 127.8. There was a big gain in the index for present economic conditions as well. The index for current economic conditions rose to 177.2 from 170.9. Such positive readings, undoubtedly, show that consumers have confidence in the economy despite the ongoing U.S.-China trade tussle.

Household optimism was largely driven labor market health. The United States added a heartening 164,000 jobs in July, almost in line with analysts’ expectations, per the Labor Department. Meanwhile, the jobless rate remained near a 50-year low of 3.7% last month. The real unemployment rate, including those who are underemployed and discouraged, also known as the U6 rate, slipped to 7% from 7.2% a year ago.

At the same time, another broader gauge of unemployment which shows people who can’t find a full-time job dropped just below 4 million for the first time since 2006. By the way, Fed Chair Jerome Powell said lately that “people who live and work in low- and middle-income communities tell us that in who have struggled to find work are now getting opportunities to add new and better chapters to their lives.”

Top 5 Gainers

Needless to say, a late-summer surge in travel will benefit U.S. airlines companies. Spike in travel also bodes well for leisure and recreational service providers. Another investment area is hotels and motels. More travel will lead to increased hotel occupancy and in turn higher revenue per available room.

We have, thus, selected five stocks from such areas that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Delta Air Lines, Inc. DAL provides scheduled air transportation for passengers and cargo in the United States and internationally. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved nearly 6% north in the last 60 days. The company’s expected earnings growth rate for the current quarter and year is 25.6% and 25.1%, respectively.

SkyWest, Inc. SKYW operates a regional airline in the United States. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has increased 1.5% in the last 60 days. The company’s expected earnings growth rate for the current quarter and year is 10.2% and 16.6%, respectively.

SeaWorld Entertainment, Inc. SEAS operates as a theme park and entertainment company in the United States. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 12.6% in the last 60 days. The company’s expected earnings growth rate for the current quarter and year is 25.7% and 209.6%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wyndham Destinations, Inc. WYND operates as a vacation ownership and exchange company. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has advanced 3.4% in the last 60 days. The company’s expected earnings growth rate for the next quarter and current year are 20.5% and 17.7%, respectively.

Allegiant Travel Company ALGT, a leisure travel company, provides travel services and products to residents of under-served cities in the United States. Currently, the company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has advanced 2.2% in the last 60 days. The company’s expected earnings growth rate for the current quarter and year are 137.2% and 36.7%, respectively.

In fact, shares of Delta Air Lines, SkyWest, SeaWorld Entertainment, Wyndham Destinations and Allegiant Travel have gained 16%, 28.4%, 29.8%, 23% and 41.2% respectively, so far this year. Take a look —

 

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