Even before U.S. vaccination efforts picked up a serious head of steam in late winter and early spring, investors from coast to coast spent a lot of bandwidth trying to find that perfect “reopening trade.”
Movie theaters, restaurants, airlines, cruise lines, commodities – a flood of speculative capital flowed into and, in a couple of cases, right back out of, these stocks. Some of those stocks were savvy early calls, and others fizzled when it became clear balance sheets would lag the hype by a quarter or two.
But now that more than 60% of Americans have at least some protection against the coronavirus, and summer plans are actually in full swing, America’s reopening has the potential to be one of the hottest plays on the market…
…that is, if you know which stocks to buy and which to pass by.
The stock I’m going to name in a second isn’t so much a “travel” stock as a “destination” stock.
In fact, to be perfectly frank with you, it’s not exactly a “recovery” stock, either.
See, this company doesn’t have much recovering to do – at all. It boosted its top line by double digits during the pandemic…
A Lot of Investors Mistimed the Recovery
AMC Entertainment Holdings Inc. (NYSE: AMC) is a “meme stock” because it’s a “recovery” or “reopening stock.” Here’s what I mean…
On Jan. 25, 2021, AMC was trading at just over $4.40. By Jan. 27, it had topped $19. There was a short squeeze on, but a big part of the long-side thesis rested on the belief AMC would make a great play as more and more Americans were vaccinated.
Of course, this was all happening at a time when vaccine supply was severely restricted; the AMC bull run happened barely a week after the U.S. peaks of deaths, infections, and hospitalizations.
Interestingly, and quite tellingly, on the day AMC broke the $19 barrier, just 536,935 travelers passed through U.S. Transportation Security Administration (TSA) checkpoints – a fraction of the pre-pandemic totals of 2019.
The AMC bulls were early… very early… too early.
By the first week of February, the stock was back down to $6 as people began to realize that the pandemic was still raging, that revenue wasn’t “there” yet, and it would be a while before Americans went back to movie theaters in any big numbers.
That was then. As I’m sure you’d agree, the country is in much better shape right now. Not only are the vast majority of Americans at least partially protected, but they are in fact on the move, spending money, and making plans.
On June 13, 2021, nearly 2.1 million travelers passed airport security checkpoints. That’s a pandemic-era record, and nearly four times the number from the same day in 2020, and only slightly less than on June 13, 2019.
So yes, this is definitely the time to look at the reopening trade with fresh eyes. That pent-up demand investors have been waiting a year and a half for is finally doing its thing.
You’re probably already seeing Top 10-style lists of the “best travel stocks to buy” and the “best tourism stocks to buy.” Airlines, casinos, resorts, theme parks, and – you guessed it – movie theaters. And in all those lists, there may be one or two gems.
I’ll save you the trouble. The answer’s in Las Vegas. “Sin City,” which hosted 42.5 million visitors in 2019, is now open at 100% capacity. Vegas is finally seeing the kinds of visitor numbers savvy investors pay attention to.
Perhaps as many as 1 million of them will stop off here to spend money…
Not a Travel Stock – a Destination Stock
I’m talking about Planet 13 Holdings Inc.’s (OTC: PLNHF) Planet 13 cannabis dispensary. This place isn’t your usual modest storefront dispensary – the management’s made sure of that.
Planet 13 is a bona fide destination – which is saying something in a city like Las Vegas. Planet 13 leverages Nevada’s fully legal cannabis status to the absolute hilt, and it’s no exaggeration whatsoever to call the place the “Disneyland of Cannabis.”
Planet 13 is billed as a “SuperStore” that offers visitors a full “experience” – you actually need a ticket to get in, like any other theme park.
It’s actually the world’s – the “planet’s” – largest marijuana dispensary, at 112,000 square feet. Just walking in the front door tends to blow visitors away, with an interactive LED floor, laser art, and aerial orb shows. Ambience, in other words.
Planet 13 has a take-the-customer-in-hand approach to service; rather than having products on the shelf that customer-visitors have to puzzle over, its staff are hospitable cannabis-concierges, making sure people have a positive experience.
They sell everything from concentrates to infused “gummi” edibles to vaporizers to pre-rolled joints. If you’re an experienced user who wants something specific, they’ve got it. If you’re simply curious, they’ve got you covered. Planet 13 has tried and, by just about every conceivable measure, succeeded in offering something for everyone.
And, for whatever reason, if anyone wants a snack or a meal, the Trece Eatery + Spirits, a Mexican restaurant, is open from breakfast to dinner.
Planet 13 does a brisk business. The numbers are as eye-popping as the place itself. This one dispensary accounts for nearly 9% of all cannabis revenues taken in in all of Nevada.
Despite the pandemic’s blow to tourism, Planet 13 sales were $70.5 million in 2020, compared to $63.6 million in 2019, or an increase of 10%. Not many destinations can point to performance like that.
It’s no surprise then that 2021 is set to be even better.
The company just reported revenue of $23.8 million, which would put it on track for $95.2 million by the end of the year – a 35% increase. And if the revenue from Q1 2021 is any indication, big things are in store for this company.
And bear in mind, this is a small-cap stock, with a $1.3 billion market cap – so its performance is all the more impressive.
Building on that success, Planet 13 is expanding its proven model; it’s looking across the state line to California – one of the most important cannabis markets on Earth – where it’ll be free to follow to a “T” the same plan that made it a smash in Las Vegas. Management expects to hire 250 people, including 80 “budtenders” serving visitors.
The bottom line? Leave the airline and hotel stocks to everyone else. This play has it all.
— Danny Brody
Source: Money Morning