BKNG Stock – 2 Leisure ETFs Could See Gains As The Post-COVID Summer Approaches
While the northern hemisphere is getting ready to welcome summer in less than a month, warmer weather combined with increased vaccination levels means there will be more people enjoying leisure activities, likley out of their homes, in the coming months.
COVID-19 has affected sectors differently. For instance, travel, leisure and hospitality industries were among the worst hit initially. But positive vaccine developments have provided tailwinds for the recent up-move in the shares of many companies in these segments.
In the U.S., several indices enable Wall Street to gauge the developments in these segments. They include:
— up over 9% year-to-date (YTD);
— up over 5% YTD;
— up over 27% YTD;
— up over 10% YTD;
— up over 2% YTD;
Despite robust stock returns so far within these sectors, the upcoming summer months could potentially lead to more economic activity, providing catalysts for additional gains.
Therefore, today we introduce two exchange-traded funds (ETFs) that could benefit further from the escalation of the opening of the U.S. economy as consumers decide to resume some of the leisure activities abandoned during lockdowns.
1. Invesco Dynamic Leisure and Entertainment ETF
Current price: $44.82
52-Week Range: $27.95 – $55.25
Dividend Yield: 0.72%
Expense Ratio: 0.64%
The Invesco Dynamic Leisure and Entertainment ETF (NYSE:), invests in shares of 30 U.S. leisure and entertainment firms. Fund managers evaluate companies on several criteria, including price momentum, earnings, management action and value.
PEJ, which follows the Leisure & Entertainment Intellidex index, started trading in June 2005. Funds under management stand at $1.85 billion. The top sector allocation (by weighting) is entertainment (32.09%); hotels, restaurants and leisure (29.77%); media (13.88%); and others.
Almost 95% of the businesses are U.S.-based. The rest come from India and the UK. The top 10 stocks comprise about 44% of the fund. Online travel platform Booking Holdings (NASDAQ:), restaurant supplier Sysco (NYSE:), restaurant chain Chipotle Mexican Grill (NYSE:), entertainment giant Walt Disney (NYSE:), on-demand food delivery platform DoorDash (NYSE🙂 and online lodging platform Airbnb (NASDAQ:) lead the names in the roster.
Year-to-date, PEJ is up about 12% and hit a multi-year high in mid-March. In the case of short-term profit-taking, the fund is likely to find support between $42.5 and $40. Interested investors could regard such a decline as an opportunity to buy into the fund.
2. AdvisorShares Restaurant ETF
Current price: $24.22
52-Week Range: $23.52 – $26.56
Expense Ratio: 0.79% per year
The AdvisorShares Restaurant ETF (NYSE🙂 is a new and small fund that started trading in April. The fund focuses exclusively on the restaurant and food service industry. It invests in restaurants, pubs, bars, fast food facilities and food catering services.
The U.S. likes eating out. Pre-pandemic metrics from the USDA highlight:
“In 2019, average food away-from-home expenditure of U.S. households amounted to about $3,526 U.S.”
In 2010, it had been $2,505. With the economy reopening, we can expect dollar figures similar to those seen in 2019.
According to the U.S. Department of Agriculture:
“In 2019, Americans spent an average of 9.5% of their disposable personal incomes on food—divided between food at home (4.9%) and food away from home (4.6%).”
In other words, with the summer months, we’re likely to see pent-up demand in the restaurant segments, especially in eating-out services.
EATZ has 31 holdings. Companies are almost equally represented from large capitalization, mid-cap and small-cap stocks. The top 10 names comprise more than 50% of net assets of $3.16 million. A total of 87% of the businesses are U.S.-based. The rest come from China, Canada and Brazil.
Among the leadings names are the fast food chain Jack In The Box (NASDAQ:); Yum! Brands (NYSE:), which primarily operates under the KFC, Pizza Hut and Taco Bell brands; RCI Hospitality (NASDAQ:), which operates clubs and sports bars/restaurants and adult nightclubs; Del Taco Restaurants (NASDAQ:), whose menu offerings mainly include Mexican-inspired food items; and Brinker International (NYSE:), which operates Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) restaurant brands.
Since its inception a month ago, EATZ is practically flat. We like many of the names in the fund. Those investors looking for a thematic fund in the restaurant segment should keep the fund on their radar.