With around 10 days left, the United States is eagerly looking forward to the Fourth of July holiday, when a record 47 million American travelers are expected to hit the road. This news is certainly encouraging at a time when gasoline prices are increasing.
With unemployment at an 18-year low and job additions continuing to be strong, there has been a steady rise in disposable income. Confident consumers are expected to contribute to this astonishing figure. In this context, we have highlighted some of the stocks that will gain from the surge in travel.
Independence Day to be Busiest Ever
According to the American Automobile Association (AAA), the United States’ biggest automotive advocacy group, millions of Americans will hit the roads, fly or travel by train in the Jul 3 to Jul 8 holiday period. AAA estimates that about 46.9 million American travelers will be traveling 80 km or more on this Fourth of July holiday. Travel volume will register an increase for the fifth straight year and touch a new all-time high since AAA started tracking these number 18 years back.
In fact, travel volume is anticipated to be so high that global transportation analytics company, INRIX, projected that July Fourth road travel in some of the most crowded cities in the U.S. will be twice that of normal time. Additionally, senior vice president of AAA Travel and Publishing, Bill Sutherland, said that the 2018 Independence Day will be busiest as “Americans take to the nation's roads, skies, rails and waterways than ever before."
Road Travel Bustle Making the Most Noise
According to AAA’s 2018 holiday travel projection, 39.7 million travelers will take to the roads this Fourth of July, which will be 5.1% higher than last year’s figure. Additionally, air travel volume is expected to register a surge of 7.9% from last year’s number to 3.8 million and post a surge in volume for nine consecutive years.
Moreover, other modes of transport, including buses, trains and cruise ships, will register travel volume of 3.5 million, advancing 5.8% from 2017’s figure. One of the major factors contributing to record-high travel volume expectation is the timing of the Independence Day this year. The July Fourth holiday falls on a Wednesday this time, which will offer travelers the flexibility to plan their trips both in the preceding and subsequent weekends to the holiday.
Encouraging Economic Data Also a Tailwind
Along with the timing of the Fourth of July holiday, confident consumers with additional disposable income are also a boon to this already busy holiday season. Additionally, increase in job additions and a record-low jobless rate in May is definitely good news.
Domestic non-farm payrolls advanced by 223,000 in May, significantly higher than the consensus estimate of 190,000, per the U.S. Bureau of Labor Statistics. This was the largest number of job additions in three months.
Additionally, the unemployment rate remained unchanged at 3.8% in May, its lowest since April 2000. Moreover, the total number of unemployed is down by 772,000 or 0.5%, over the year. Also, disposable personal income increased by 0.2% in April.
5 Solid Picks
A busy holiday season, strong jobs growth, record low jobless rate and increasing disposable income are encouraging more number of people to plan a holiday this Independence Day.
In this context, we have selected five stocks that are expected to gain following these developments. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Polaris Industries Inc. (NYSE:PII) designs, engineers, manufactures and markets power sports vehicles all over the world.
This Grand Prairie-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 33.2%. The Zacks Consensus Estimate for the current year has improved 4.9% over the last 30 days. Polaris Industries has gained 7.2% in the past three-month period.
CSX Corporation (NASDAQ:CSX) is a provider of rail-based transportation services in the United States and Canada.
This Jacksonville-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 42%. The Zacks Consensus Estimate for the current year has improved 0.9% over the last 30 days. CSX has gained 18% in the past three months.
Six Flags Entertainment Corporation (NYSE:SIX) owns and operates regional theme and water parks under the Six Flags brand name.
This Medina-based company has a Zacks Rank #1. The expected earnings growth rate for the current year is 33.2%. The Zacks Consensus Estimate for the current year has improved 4% over the last 60 days. Six Flags Entertainment has gained 20.2% in the past three months.
InterContinental Hotels Group PLC (NYSE:IHG) owns, manages, franchises and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China.
This Denham-based company has a Zacks Rank #2. The expected earnings growth rate for the current year is 22.2%. The Zacks Consensus Estimate for the current year has improved 2.8% over the last 60 days. InterContinental Hotels Group has gained 2.9% in the past three months.
Lindblad Expeditions Holdings, Inc. (NASDAQ:LIND) is a provider of expedition cruising and adventure travel services.
This New York-based company has a Zacks Rank #1. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 76.9% over the last 60 days. Lindblad Expeditions Holdings has gained 28.2% in the past three months.
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