Posted May 26, 2023
By Zach Scheidt
Welcome to Travel Season! Here's How to Profit
Memorial Day weekend marks a big shift for American consumers, leading to some big opportunities for your retirement investments.
Here in my neighborhood, the kids are excited to be done with school for the year. And families across the country are gearing up for vacations.
This year, my in-laws invited their grandkids to spend two weeks at the beach with them. And I've got at least two conferences to attend over the summer.
Just this weekend, airports are expecting the busiest Memorial Day weekend on record as millions of passengers take to the skies.
And all of these trips will naturally pad the profits for travel-related companies.
Let's take a look at some of the investments you can make this summer to profit from a surge in travel spending.
It Starts With the Airlines
Typically when airlines are in the headlines, it's for all the wrong reasons...
Flight delays, turbulence, and unruly passengers are unfortunately just a few of the many challenges these companies face.
But despite the headaches, airlines still do a good job of getting millions of passengers to their destinations and back home again.
This summer, I'll be watching airline stocks very closely for potential trading opportunities.
I don't typically like to hold these stocks for long-term investments. That's because too many variables can hurt even the most well run airline.
Worker shortages and strikes, bad weather, regulations, and competition tend to drive stock prices lower every few years.
But during high-profit seasons, airlines can trade sharply higher, giving nimble investors some excellent profits.
This summer airlines will benefit from higher ticket prices, strong demand, and relatively low fuel costs.
So buying airline stocks ahead of the summer travel season looks like a great play for your retirement account.
Speaking of Fuel...
Oil prices are relatively low right now because investors are worried about a recession. Prices have also been manipulated lower thanks to distributions from the U.S. Strategic Petroleum Reserve (SPR).
(Or the Strategic Political Reserve as I call it. Because the Biden administration has used this resource as a political tool instead of an emergency reserve as it was intended.)
This summer we'll see a significant shift in crude oil supply and demand dynamics.
Not only will the U.S. stop distributing oil from the SPR, but there is a high probability that the U.S. will start spending money to refill the reserve.
This will drive more demand and help keep a floor under crude oil prices.
Meanwhile, OPEC+ has been publicly warning investors not to bet on lower oil prices, because the cartel is ready to cut production to keep global energy supplies low (and prices high).
All of this creates a bullish backdrop for oil and gas producers. And this at a time when many of these stocks have pulled back (or at least consolidated last year's gains).
So as the summer driving and flying and boating and recreational season kicks off, my research is pointing to new opportunities for energy stocks.
Make sure you own some in your investment account!
Don't Forget the Destinations!
Finally, no travel season would be complete without exciting destinations.
As an investor, you've got plenty of opportunities to profit from companies that are attracting travelers this year.
Hotel stocks, theme parks, resorts, and even cruise operators are all in play this summer.
As you pick your stocks, consider companies that have international exposure, especially those with locations in and around China.
Here at the Rich Retirement Letter, we've talked about the weakening U.S. dollar.
A weak dollar gives overseas travelers more spending power with currencies that are holding up better than the greenback.
And while China's reopening has taken longer to materialize than expected, I'm still expecting China's post-pandemic travel season to be a major profit generator for hotels and resorts in the country.
I'll go ahead and sign off so you can enjoy this holiday weekend. But please make sure you're invested in some of the best companies that will profit from summer travel this year.