August 14, 2020
Be it in-person or virtual, school is about to start again, and millions of Americans are looking for a getaway as a last hurrah before Labor Day. With international destinations off the docket for most Americans and many reluctant to take to the skies, we can expect millions to pack their bags and hit the road. That said, here are a few stocks that stand to benefit from an increase in family road trips.
Choice Hotels International, Inc. (Tii:CHH)
It seems to be an unwritten rule to forego the amenity-filled higher-end hotels in favor of discount lodging when on a road trip. Rockville, Md-based Choice Hotels owns several economy hotel brands that appeal to the cost-conscious traveler, including EconoLodge, Quality Inn, Comfort Inn, Suburban Extended Stay, and more. As of March 31, 2019, Choice Hotels franchised 7,005 properties in 41 countries and territories worldwide, with approximately 568,112 rooms.
O’Reilly Automotive Inc. (Tii:ORLY)
Before hitting the road, consumers are likely to make sure their vehicle’s fluids, tires, brakes, and other parts prone to wearing down are in prime working condition. That’s where automotive aftermarket parts retailers like O’Reilly Automotive come in. Shares of O’Reilly jumped 13% compared to a 5.5% rally in the S&P 500 in July, according to S&P Global Market Intelligence, as the economy began to re-open and people took to the roads again.
Seven & i Holdings Co., Ltd. (Tii:SVNDF)
A free Slurpee with every fill-up? That could well be an option thanks to an agreement by indirect 7-Eleven subsidiary, Seven & i Holdings, to acquire the Speedway chain of gas stations from certain subsidiaries of Marathon Petroleum (Tii:MPC) in a $21 billion cash deal. Speedway operates approximately 3,900 convenience stores in 36 U.S. states. With this deal, which is expected to close in Q1 2021, 7-Eleven would have a presence in 47 of the top 50 most populated metro areas in the United States.
Tencent Holdings Ltd. (Tii:TCEHY)
If there are children in the car, it’s just a matter of time before hapless parents are subjected to complaints of boredom or the never-gets-old, "Are we there yet?" Enter: Tencent and its mobile video game division. It’s not unreasonable to expect parents to open their wallets for some peace of mind before embarking on their journey, making shares of mobile game developers worth considering. Tencent is a major player in the mobile gaming industry, having developed the popular, “Call of Duty: Mobile,” which has surpassed 35 million downloads. TechCrunch estimated last year that $68.5 billion – or 45% – of the $152 billion global gaming market would come from mobile games.
Thor Industries, Inc. (Tii:THO) and Winnebago Industries Inc. (Tii:WGO)
Nothing says road-tripping American-style like filling up a recreational vehicle with family and friends and heading to one of the country’s many national parks or other attractions. Expect greater demand for these vehicles as more Americans understand that sometimes getting there is half the fun and look to take the scenic route.
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