The grand ‘reopening’ will most likely just be an easing into normalcy as many sectors of society are already beginning to open their doors. However, even in a limited capacity, the increase in public spending and a return to travel is highly anticipated on all levels. So here are three top ‘reopening’ stocks that an investor should buy now.
Disney’s (NYSE: DIS) stock increased 24% in 2020 and is currently up a further 4.5% since the start of the year. Its resorts began reopening on the 22nd March with its ‘value’ all-stars movie resort. The California Adventure park will open to the public on April 30, followed by other parks throughout summer. Initially, the parks will reopen at 15% capacity for locals to the area. Whilst this level of capacity won’t turn a profit, it does give Disney time to ramp up its operations and test new safety measures put in place to prevent the spread of the virus.
Disney+ has also been a major asset for the company during the pandemic. It managed to grow its subscribers at such a high rate that Disney reached its 2023 goal of 90 million subscribers within 16 months of launch. With its current schedule set to release new content every week of 2021, the ‘reopening’ should not pose much of a threat to its subscriber retention as many remain invested in their favorite shows.
Furthermore, like many other companies, Disney has stated it will focus more on direct-to-consumer sales, building up its e-commerce sector. This is a common trend among many brands due to the huge increase in online sales. Disney, which has seen an impressive recovery since March last year, is now poised to continue its gains once restrictions are eased further.
Mastercard (NYSE: MA) is often left out when looking at the payment solutions sector. PayPal is the stock everyone wants to buy due to its 2020 performance. Yet, Mastercard also performed very well in the second half of 2020 rebounding 20.7%.
In its most recent report, Mastercard saw a 7% decline year-over-year (YoY) in its top line with revenue coming in at $4.1 billion. Its bottom line was also down by 16% with $1.64 earnings per share. However, this merely illustrates the overall effect that the pandemic has had on general public spending. Indeed, on a quarter-over-quarter basis, Mastercard’s revenue is actually up 7% and its earnings are up 2.4%. This shows that public spending is starting to increase, improving Mastercard’s own financials alongside it.
The company will see a marked improvement in its overall revenue as things such as travel and borders begin reopening. Mastercard earns far higher margins than the likes of PayPal on cross-border and international card transactions. This means that it is perfectly positioned to enjoy a surge in revenue, even if a re-opened travel sector is running at limited capacity only.
Travel stocks are currently on the watchlist of many investors as summer approaches and restrictions are eased in line with the number of vaccinated people. With the industry as a whole expecting to recoup some of its losses over the past year, investing in this market could be a savvy move. In particular, the recently public company Airbnb (NASDAQ: ABNB) is set to benefit from a return to travel and holiday bookings.
Firstly, Airbnb is firmly situated as an online digital booking system that allows people to rent out their own homes for short-term (and often long-term) lets. With turnovers being scheduled by homeowners, sanitization and other COVID measures are much easier to control from an individual perspective. As for the holiday-goers, this type of holiday let gives the renter more control over who they interact with, removing the need for hotel staff, etc.
As for its financials, in 2020, Airbnb saw its gross bookings value decrease by 37% YoY and its revenue decrease by 30%. Despite this, the company still took it as a win. 193 million nights were booked on its marketplace last year and revenue came in higher than the 50% decrease it originally expected.
Airbnb will be the safe, relaxed option that many friend groups and families will opt for as travel restrictions ease and people gift themselves a much-needed break from lockdown life.
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Contributing Writer at MyWallSt
Poppy likes companies that go the extra mile. Her favorite stock is Amazon because she is fond of its innovation, variety, and creative solutions to sustainability.