Another week, another positive vaccine announcement!
Yesterday, biotech company Moderna released preliminary results for its Covid-19 vaccine.
Moderna’s vaccine has proven to be more than 94% effective in preventing the contraction of the virus.
And it looks like even the few patients who did get coronavirus after receiving the vaccine had very mild symptoms.
This comes on the heels of last week’s positive announcement from Pfizer on its vaccine.
With a second effective vaccine available for manufacturing, the future looks bright!
Because if both companies can ramp up production quickly, there could be tens of millions of Americans inoculated very early in 2021.
And that’s great news for our society, the economy, and your retirement!
Today, I want to make sure you’re prepared for the reopening with three great stocks that should benefit from future vaccine rollout.
The Market Is Looking Ahead to Better Days
One thing I keep hearing over and over again as I watch the news coverage on these vaccines is that they aren’t here yet and that we still need to be careful.
And that’s definitely true. I’m still making sure to keep proper social distancing in my personal life and reminding my family to do the same.
But you need to remember that stock prices trade on what investors expect is going to happen — not on what’s happening right now.
So as the prospect for widespread vaccines increases and the economic risk of coronavirus begins to decline, stocks that benefit from an economic reopening will soar!
We’re already starting to see some of the best reopening stocks move higher.
And today, I want to help you invest in this trend so you can grow your retirement wealth through this exciting season of growth.
So let’s take a look at three of my favorite “reopening plays” for your retirement!
Reopening Play #1: Darden Restaurants Inc. (DRI)
Restaurant chains have been some of the hardest-hit companies during the coronavirus crisis.
People were rightfully afraid to eat in a crowded restaurant, and many businesses have struggled to adjust to the take-out/delivery business model.
As the parent company of Olive Garden, Longhorn Steakhouse, The Capital Grille, and other popular brands, Darden Restaurants had the benefit of popularity with a wide range of loyal customers.
The company had to make major adjustments to the way it does business.
Over the last 12 months, profits have turned negative and the stock initially lost more than 75% of its value in March of this year.
But as DRI adjusted to the crisis, the stock has recovered the majority of its losses. And a reopening should keep this trend moving in the right direction!
DRI can be a great stock to hold in your retirement portfolio because of the yield you’ll receive.
This year, DRI suspended its dividend to preserve cash during the crisis. But as we start to see the economy recovering, DRH reinstated its dividend, paying $0.30 per share each quarter.
That gives you a 1.1% yield if you buy shares at today’s price near $110.
Over the next few quarters, I expect DRI to increase its dividend back to $0.88 per quarter — the amount the company paid investors before the crisis.
If DRI reinstated its full $0.88 dividend, you’d be getting a 3.2% yield from your investment.
That’s a great income from a company that should continue to grow throughout the reopening process.
Reopening Play #2: Cedar Fair L.P. (FUN)
Going to a theme park hasn’t seemed like an appropriate family activity this year. I just can’t imagine touching all of the handrails and sitting on the seats in any public park.
But once the coronavirus vaccines start to be distributed, people are going to want to travel again, and families will take vacations again.
I expect 2021 to be a big year for theme parks because families will make up for outings that were canceled in 2020. I know my kids are begging me to take them somewhere special as soon as we can make it happen.
Cedar Fair operates a portfolio of 11 amusement parks and three water parks in North America. It also has four hotels to help generate more profit from families traveling to its parks.
The stock has moved higher following the vaccine announcements and I expect that trend to continue.
We could also see a big pop in the stock whenever the company decides to reinstate its dividend.
Following the company’s March dividend this year, FUN suspended payments to investors while waiting for the crisis to blow over.
But as profits jump in 2021, I expect the company to reinstate its dividend and maybe even issue a special “catch up” dividend to reward investors for sticking with the stock.
If FUN reinstates its former $0.935 quarterly dividend, that would represent more than a 10% yield on the stock.
Of course, it may take some time before management is comfortable paying that much.
But over time, we should eventually get back to that level of income. And if you buy shares today, that yield will be very attractive.
Reopening Play #3: United Airlines Holdings Inc. (UAL)
It’s hard to find an industry more affected by coronavirus than the airlines.
With so much money spent on planes, pilots, support staff, fuel, gate fees and so much more, the airline business has been financially hurt by the crisis.
That’s largely why (until now) I’ve cautioned you to stay away from airline stocks. The possible reward just wasn’t worth the risk of an extended crisis.
But now that we have positive news on two vaccines, it looks likely that travel will pick up in 2021.
This means airlines will be able to sell more tickets, operate more flights, and generate more revenue.
This comes at a time when the airlines are now operating with lower expenses because of some cost-cutting that needed to happen this year. Ironically, this could leave airlines with even better profit margins as the economy starts to reopen.
That’s why I’ve got my eye on United Airlines. And we’re already starting to see the stock break higher.
It’s still very early in the recovery process, though, and I think we’ll continue to see the stock trade higher as we get more information on how business and personal travel will pick back up.
Buying shares today gives you a chance to get in on this trend after a major announcement — but before the full effect of a recovery is baked into the price of the stock.
Take Your Time With These Reopening Plays
Before we wrap up, I’d like to offer a word of caution here…
There’s still a long way to go until we start to see a full recovery.
Between today and when these vaccines become widely available, we’ll certainly see more coronavirus cases reported. We may even see more lockdowns initiated.
This could cause a temporary drop for some of our reopening plays.
The market will continue to be volatile, and these stocks will probably not go higher in a straight line.
So I wouldn’t recommend going “all-in” on these stocks today.
But if you start to build a position in these stocks now and plan to add to your positions along the way…
You’ll put yourself in a great place to build your retirement wealth with some of the strongest reopening plays in the market today.