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These 3 Reopening Stocks Are Up 80% or More -- and Could Still Go Higher

By Matthew Frankel, CFP® - Updated Apr 15, 2021 at 2:52PM

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The return to normalcy still has a long way to go, and these three stocks could be big winners.

With the COVID-19 vaccine rollout going quite well and many states targeting full reopening of their economies by summer, it shouldn't come as a huge surprise that many so-called "reopening stocks" have delivered strong performance recently.

However, we have a long way to go before the economy is truly back to normal, and there are some high-flying reopening stocks that could be just getting warmed up. Here are three in particular, all of which have delivered total returns of more than 80% over the past year, that could still have lots of upside potential as the U.S. economy rebounds over the next few years.

A skier heading down the slopes.

Image source: Getty Images.

Company (Symbol)

Industry

1-Year Total Return

STORE Capital (STOR 0.30%)

Net-Lease Real Estate

94%

EPR Properties (EPR -0.34%)

Entertainment Real Estate

88.6%

Vail Resorts (MTN -3.35%)

Ski Resorts

85%

Data source: YCharts. Returns as of April 13, 2021.

The right kind of retail

STORE Capital is a real estate investment trust, or REIT, that focuses on single-tenant properties operated by tenants in the retail, service, and manufacturing industries. For example, you'll find quite a few restaurants, day care centers, auto repair businesses, and metal fabrication shops in the company's portfolio of about 2,600 properties in the United States.

Virtually all of STORE's tenants are open, and most are paying rent, which is why the company has rebounded so sharply since the depths of the shutdowns. But this could be just a starting point. STORE Capital estimates the size of properties it could potentially acquire at $3.9 trillion in market value from over 2 million properties.

Lots of good news lately

EPR Properties is an "experiential REIT," and while virtually all of its properties were shut down initially by the pandemic, about half of the portfolio was never in serious trouble. For example, TopGolf is a major EPR tenant and reported extremely strong traffic as soon as its locations reopened. EPR also owns lots of waterparks, ski resorts, and family entertainment centers, most of which are open and doing quite well.

On the other hand, about half of EPR's properties are movie theaters, and while many have reopened, there hasn't been much for moviegoers to see. But recent news has been much more promising. Top tenant AMC Entertainment (AMC -1.64%) dramatically improved its balance sheet with recent stock sales following the "Reddit trader" momentum. Warner Bros. recently announced its movies would return to theater-first releases in 2022. And Regal Cinemas, which decided to keep its U.S. properties closed through the winter, has decided to reopen this month.

EPR has a strong balance sheet that should allow it to comfortably make it through the tough times and pursue any growth opportunities that arise. As the movie business gradually returns to normal, which all indications point toward, the stock could have quite a bit more upside.

Strong results and a bright future

When it comes to ski resorts in the United States, Vail Resorts' assets are in a class of their own. And while the recent ski season wasn't entirely unaffected, Vail has reported encouraging results from its 34 resorts. Total visitation only declined by about 5% year over year, which is quite impressive when considering things like social distancing measures and capacity limitations.

One recent move Vail made was initially perceived negatively by the market, but I feel it is a brilliant decision. The company recently decided to reduce the price of all passes by 20%, which could lead to a short-term revenue hit but could dramatically increase pass sales and therefore set the company up to create thousands of new, recurring customers. The company reports that pass holders actually spend more than non-holders on things like ski school and equipment rentals and most importantly, are more likely to visit Vail's resorts the following year.

There could still be room to climb

The key takeaway is that all three of these stocks still have quite a bit to gain as the economy continues to return to normal and some big question marks about these businesses start to fade away. And not only that, but all three have large opportunities for future growth. The bottom line is that all three of these can be great reopening plays with tons of long-term upside as well.

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Stocks Mentioned

Vail Resorts, Inc. Stock Quote
Vail Resorts, Inc.
MTN
$216.36 (-3.35%) $-7.51
EPR Properties Stock Quote
EPR Properties
EPR
$47.14 (-0.34%) $0.16
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$12.57 (-1.64%) $0.21
STORE Capital Corporation Stock Quote
STORE Capital Corporation
STOR
$26.70 (0.30%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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