Taking advantage of seasonal trends is a great way to beat the market. But buying summer stocks this year could be tricky…
Fortunately, we're here to help.
We'll show you exactly which three popular stocks to avoid, plus one with massive profit potential.
In fact, one investment bank is predicting more than a 60% rise in this company's share price…
A Weak Vacation Season Will Weigh Down These Summer Stocks
Investors looking to catch a seasonal pop from summer travel could be in for a rude awakening if they don't know where to look.
Soaring gas prices are going to weigh down industries connected to driving. That could hurt investors who wade into companies hit by higher gas prices.
And this chart shows you exactly why…
Gas prices are surging to nearly $3 a gallon, their highest price since 2014, just as the summer vacation season kicks off. In fact, gas prices are already 36% higher than they were this time last year.
And last year, Americans spent a whopping $100 billion on vacation, their highest spending level ever. It was also $20 billion more than they spent in 2013, when the average price of gasoline was over $3.60 in early June.
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With gas prices rocketing 36% higher this year, Americans are going to be less likely to take that trip to the beach or road trip to visit relatives across the country. 41% of Americans say they'll be driving less this year, according to Gallup.
That means popular seasonal plays – especially those that rely on car traffic – could backfire for unsuspecting investors.
One of the worst stocks to play right now is TravelCenters of America LLC (Nasdaq: TA).
It may seem intuitive that higher gas prices will lead to higher profits for gas stations. But gas stations have notoriously thin profit margins on gasoline, which means they are hardly making money on gasoline sales.
That's not the worst part, either. With fewer people driving, stations get fewer customers paying for their more profitable items, like food and drinks.
And that's going to hurt TA's bottom line – and your profits, if you buy in hoping for a seasonal boost.
Other popular summer plays aren't great buys now, either.
McDonald's Corp. (NYSE: MCD) is another firm you might expect to get a pop from vacation travel. After all, weary travelers are looking for quick, cheap, and reliable food on their journeys, and McDonald's is within easy reach across the country.
But McDonald's currently has our lowest Money Morning VQScore™, which means the stock has very little upside right now. And higher gas prices mean fewer travelers, so don't count on summer vacation season to save it.
Our last stock to avoid this summer is Expedia Group Inc. (Nasdaq: EXPE). The stock hit its all-time high last July amid the biggest vacation spending season on record.
But it's been all downhill since.
Since hitting its peak of $159.50 on July 28, the stock slid 25%. Clever investors might look at it as a buying opportunity, especially as vacationers turn to Expedia to book hotels, flights, and rental cars.
Don't count on it. With a VQScore of 1 – our lowest score – we aren't forecasting the stock to run much higher right now, especially as gas prices squeeze summer vacationers.
But there is an excellent way to get a summer pop from one of the best stocks you can buy.
In fact, this company's top product is a household name with a near cult-like following. And you'll certainly be seeing a lot more of it as the weather gets warmer.
Take a look at how this little-known stock could bring you a tidy 60% gain…