With the warmer weather, it's the perfect time to add some good summer stocks -- stocks of companies that thrive in summertime -- to your portfolio.
A theme park company is the ultimate example of a summer stock because amusement parks are generally packed with crowds from Memorial Day to Labor Day. And, even though these companies are seasonal stock picks, they're capable of generating returns on a long-term basis.
Top summer stocks
Let's take a closer look at the best stocks to buy in the summer of 2022:
| Company | Market Capitalization | Description |
|---|---|---|
| Pool Corp. (NASDAQ:POOL) | $13 billion | Wholesale distributor of swimming pool supplies and equipment. |
| Home Depot (NYSE:HD) | $277 billion | Home improvement retailer that sells construction products and services. |
| Camping World Holdings (NYSE:CWH) | $1 billion | Recreational vehicle retailer offering new and used vehicles, parts, and service. |
| The Walt Disney Company (NYSE:DIS) | $170 billion | Entertainment leader with films, theme parks, merchandise, and streaming services. |
| Redfin (NASDAQ:RDFN) | $1 billion | Full-service real estate brokerage that offers low fees of 1.0% to 1.5%. |
| Delta Air Lines (NYSE:DAL) | $19 billion | Major U.S. airline with service to more than 300 destinations across more than 50 countries. |
| Avis Budget Group (NASDAQ:CAR) | $8 billion | Rental car company with more than 11,000 locations in approximately 180 countries. |
1. Pool Corp
There might not be a more fitting summertime stock than Pool Corp. True to its name, Pool Corp. is a leading wholesale distributor of swimming pool equipment, parts, supplies, and related outdoor living products.
While many of the best summer stocks were severely affected by the COVID-19 pandemic, Pool Corp. is a notable exception. The company's profits increased significantly in 2020 as people put more money into their homes, and they have kept growing since then.
After setting a sales record in 2020, Pool Corp.'s net sales rose another 35% to $5.3 billion in 2021. The company reports that about 60% of consumer spending in the pool industry is for pool maintenance and repairs. Although pool demand will likely decrease due to the economic downturn, Pool Corp. is well-positioned to continue to profit from its new customers.
2. Home Depot
Home Depot does well during the summer months. The home improvement leader tends to post its biggest revenue numbers during the second and third quarters of the year when many people work on their homes.
The home improvement giant has posted strong sales numbers that increased by 19.9% in 2020 and 14.4% in 2021. It recorded $151.2 billion in sales in fiscal 2021, along with net earnings of $16.4 billion.
As the largest home improvement retailer, Home Depot is well-positioned to continue growing and is one of the safer investments to hold during a recession. The company's stock is also well-suited for dividend investors since Home Depot has consistently increased its dividend over many years.
3. Camping World Holdings
Road trips and camping are two popular summertime activities. Recreational vehicles (RVs) are a popular way to do both, and Camping World Holdings reports that it's the largest RV retailer in the country.
RV sales and rentals have both been rising, and 2021 was the industry's best year yet. It set a new record by shipping more than 600,000 units, a 19% gain over the previous high of 504,600 in 2017.
Camping World has benefited from the growing interest in RVs. It recorded $6.9 billion in revenue in 2021, a 26.9% year-over-year increase. Gross profits were up even more, climbing by 44.3% to reach $2.5 billion.
Inflation and economic uncertainty have cooled off RV sales figures in 2022, but that could make it a good time to invest in Camping World at a lower price. It has been aggressively expanding with sales and service centers across the country and an RV rentals website.
4. The Walt Disney Company
With a long history of blockbuster movies and family-friendly theme parks worldwide, The Walt Disney Company has consistently been one of the top summer stocks to buy.
Disney owns several of the top film production companies, including Marvel Studios, Lucasfilm, and Pixar, and it strategically schedules many of its tentpole films during the summer blockbuster season.
Summer vacation is a popular time of year for Disney's parks and resorts, but Disney isn't wholly reliant on the summer season. Its diverse revenue streams allow it to thrive even during colder weather.
Disney+, in particular, has been a big winner for the company's media and entertainment segment. While rival Netflix (NASDAQ:NFLX) had its first subscriber dip in more than a decade in the first quarter of 2022, Disney+ added 7.9 million subscribers.
5. Redfin
The summer months are the busiest for real estate, and Redfin is one of the most interesting real estate stocks. It aims to be a one-stop shop for all types of real estate transactions, including buying, selling, and renting.
The big draw, though, is its low-cost model. Redfin charges a 1.5% listing commission, half the industry standard. Because of its lower fees, it reports saving customers more than $1 billion so far.
Rising interest rates and a market cooldown are both factors to consider before investing in Redfin. But the company's innovative approach gives it an edge considering the inconvenience and expense of the traditional home-buying process.
6. Delta Air Lines
Most airline stocks are solid picks for the summer since that's the busiest season for air travel. Although gas prices have been an issue for airlines, they're still worth a look for patient investors, especially now that travel demand is back to pre-pandemic levels.
Of the major carriers, Delta is a strong long-term play because it has plenty of international routes and hubs in multiple big cities. Delta is also known for its customer service, regularly ranking near or at the top of the J.D. Power ratings for customer satisfaction.
Delta has been partnered with American Express (NYSE:AXP) since 1996, and the companies offer several co-branded credit cards. This partnership adds another source of revenue and helps to further boost customer loyalty.
7. Avis Budget Group
Avis Budget Group is a rental car company that boasts more than 11,000 locations worldwide. Its biggest brands are Avis Rental Car, Budget Rental Car, and Zipcar, the innovative car rental company that allows members to use cars for as little as 30 minutes. The busy summer travel season is good for Avis since many travelers need rental cars after arriving at their destinations.
Avis was heavily affected by the COVID-19 pandemic. Although 2020 was a difficult year for the car rental company, it bounced back in 2021. Full-year revenues increased by 72% and were 2% above the company's pre-pandemic numbers in 2019.
Related investing topics
Should you invest in summer stocks?
Investors historically have been cautioned against investing in the summer months. The well-known adage to "sell in May and go away" is based on expectations for muted gains when the weather is nice.
In recent years, the stock market has performed strongly throughout the summer. This season of the year is such an important time for many businesses, making it worthwhile to consider adding some high-quality summer stocks to your portfolio.
