3 stocks that will shift as consumers move from goods to experiences
We are at the phase of the reopening of the game where experiences are starting to shine. We are going to leave. We do stuff. This must be good news for Airbnb (ABNB 4.04%), REP properties (REP -0.72%)and six flags (SIX 0.82%). The change is real, and we’ve seen it happen in recent weeks as retailers have stepped in with new financial statements.
“We’re seeing our customers’ increasing mobility and love of novelty showing up in their Target purchases as shopping carts shift more towards experience and outing categories,” Target Chief Growth Officer Christina Hennington said during the mass retailer’s earnings call two weeks ago.
If you want to make money, you better follow the money. Let’s take a look at why Airbnb, EPR Properties and Six Flags are three stocks that have a promising near-term future.
The travel industry will understandably be one of the biggest beneficiaries of consumer budgets for getaways this summer. There’s no shortage of hoteliers, airlines and cruise lines, but don’t assume we’re going to be traveling the same way we did before the pandemic.
Airbnb is not a hotbed of cramped, noisy, cookie-cutter hotel rooms. There are now over 6 million active listings on the platform, providing users with the space, local color and inspiration to make getaways memorable. Business was booming before the COVID-19 shutdown, and business is naturally picking up again. Revenue jumped 70% in its most recent quarter.
Results may have initially been depressed in 2020 when the lockdown reduced travel capacity, but Airbnb was one of the first hospitality plays to rebound because travelers avoiding crowds didn’t want to spend time in crowded hotels. It is one of the few accommodation rooms that is already well ahead of its pre-pandemic state. Rolling revenue is 38% higher than we were for all of 2019.
2. Properties of REP
You don’t have to leave your area code to enjoy memorable experiences. We’re going back to the movies, plan to visit water parks this summer, and meet up with friends at next-gen golf practice courses over the weekend. EPR Properties is a real estate investment trust (REIT) that owns income-generating properties focused on experiential properties.
Multiplexes figure prominently in EPR’s history, accounting for 43% of its contractual cash revenue. Movie theaters may not seem like a thriving business, but don’t let the past couple of years deter you. Top Gun: Maverick broke box office records for the Memorial Day holiday weekend, and this summer is going to be loaded with blockbusters.
Theater operators have done many things to stay alive. The country’s biggest player had to dilute its shareholders with a fivefold increase in its outstanding shares. The second largest player had to close its operations twice before turning on his spotlights. EPR Properties offers the benefits of recovering theater inventory without dilution, as it only collects rental payments on the 175 theaters in its portfolio.
As a REIT, it naturally shares the wealth with its investors, and right now they are enjoying a high yield of 6.4%.
3. Six Flags
National theme parks are getting all of the market’s attention, but they’re run by media giants that operate streaming services and broadcast networks that stand to lose more than gain as we head back into the world. ‘outside. Regional amusement parks offer investors a pure play on the day getaway.
Six Flags is heading into its revealing summer season. The dynamic is strong. Guests are willing to pay more for a day of thrill rides and family fun. Admission revenue per capita rose 31% for its most recent quarter, and park spending per visitor is growing even faster. Amusement parks will be busy this summer.
Six Flags also has an exciting new CEO in Selim Bassoul who has successfully put the pieces together in other industries. In other words, it’s time to ride Six Flags.