Remember when you thought prices at the pump couldn't get any higher? And then they did? With crude oil prices racing toward $70 a barrel, no relief appears to be on the way. Brother, can you spare a gallon?
It hurts. It hurts so crude. Ever-rising gasoline prices have prompted many investors to check out petroleum companies and oil exploration concerns, but how many folks truly know enough about the sector they're suddenly buying into? Forget the obvious benefits for a moment. If you don't know the difference between an oil drilling platform and a beach buoy, maybe you're not cut out for the energy sector.
Don't get me started on novices buying into precious metals, either. Yes, higher fuel prices can ignite inflationary pressures. Many savvy investors have struck it rich with gold-mining stocks. Yet, again, if you don't know the difference between a minted gold bar and a chocolate minted bar, you're only asking for trouble.
Buying what you don't know can be a dangerous pastime. However, there are ways to buy into companies that stand to prosper from pricey petrol yet are familiar to most of us. In fact, the leisure sector is loaded with such companies.
Leisure? Isn't having to pay a king's ransom for a gallon of gas a killer of disposable income? If even the mighty Wal-Mart has blamed soaring fuel costs as a deterrent to its havens of thrift, can there really be some winners in this consumer-geared space?
Absolutely. As long as the economy doesn't derail in the process, there are plenty of stocks sitting pretty, miles away from the nearest pump. Let's dig into seven of them.
1. Netflix (NASDAQ:NFLX). What's not to like when it comes to Netflix and higher fuel prices? Having DVD rentals delivered straight to your mailbox solves two round trips to the video store. If money is tight, entertainment doesn't get any more affordable than firing up the DVD player for the night. Netflix also has the advantage of a distribution network that allows it to ship titles overnight through first class mail. The last bastion of fuel surcharge-free shipping is your friendly, neighborhood post office.
2. Apple Computer (NASDAQ:AAPL). You've got to love iPods as a gas-crunch play. It's the gadget of choice for active pedestrians and public-transportation commuters. More than 20 million iPod players have been sold since Apple rolled out the digital music devices four years ago, most of those being purchased over the past year alone. The other delicious fuel-friendly iPod kiss comes from Apple's own iTunes store. There, folks have purchased more than 500 million songs that are digitally and instantly delivered. You don't have to drive out to the record store. And pressed CDs don't have to be driven about through various layers of physical distribution.
3. Overstock.com (NASDAQ:OSTK). If Wal-Mart suffered because folks didn't want to drive out to get the bargains, what about the bargains that drive out to you, instead? Overstock isn't the only penny-pinching hub in cyberspace, but it's probably the best-known pure play in e-tail thrift. Now, that doesn't mean that the "O" in the company's "it's all about the O" ad campaign stands for "oil." Overstock has often relied on discounted shipping promotions, and that's an area that will continue to sting if fuel prices keep rising and the company feels that it has to subsidize a bigger chunk of the delivery process. However, that's the price of admission when it comes to delivering physical goods.
4. Amazon.com (NASDAQ:AMZN). Well, you probably saw this one coming, but I'm excited about three recent developments at the leading retailer. The first one I like is Amazon Shorts, the company's new venture providing digitally delivered short stories from top-shelf authors. Then we have every possible indication that Amazon is readying an entry into digital music distribution. Those two moves are pretty self-explanatory, given the cheap, fuel-free merit of online distribution.
The third move I find appealing is this past April's acquisition of BookSurge, a company that prints books on demand. The initial attraction here was for Amazon to never run out of foreign-language titles and out-of-print books. However, in these gas-conscious times, the consumer-direct approach is a winner. Providing one-off printing of books simplifies the physical distribution process while alleviating Amazon of the burdensome inventorying.
Don't take any of this as selling short Amazon's traditional business. The Census Bureau announced that online retail sales shot up by 26% in the June quarter. Retail sales in general rose by a more modest 8.4% during that time. The online migration is helping. The more trustful consumer mindset and the Web-based convenience certainly aren't hurting. However, from a fill-'er-up perspective, Internet shopping is going to become even more popular from folks who see driving to the mall as a cash-draining experience.
5 and 6. XM (NASDAQ:XMSR) and Sirius Satellite Radio (NASDAQ:SIRI). Why would I lump two rivals together? Well, because I don't see XM and Sirius as rivals at all. They are competing together against terrestrial radio -- and winning. They also continue to differentiate their offerings to the point where we will eventually see many ardent radio listeners with dual subscriptions. There is no denying that satellite radio is popular. It seems as though every three months, we see XM and Sirius giving higher projections on how many subscribers they will land in the near term. Right now, the two expect to combine for 8.5 million subscribers by the end of the year.
Because satellite radio got its biggest initial boost for carmakers, some would think that the company is at the mercy of the fuel-battered drivers. That's not the case. The retail aftermarket -- including home and portable satellite radio receivers -- is becoming a more prominent part of the adopter process. Car sales remain shaky, even with the deeply discounted promotions, yet XM and Sirius are still signing up a record number of subscribers every passing quarter.
7. Great Wolf Resorts (NASDAQ:WOLF). The leading chain of upscale lodges with family-friendly enclosed water parks wasn't simply crying wolf a few weeks back when it warned that its summer season wasn't going so well. That led some to believe that the company had become yet another travel-industry victim of higher gasoline prices. I don't see it that way. Great Wolf prides itself on being a self-contained destination. Drive over. Park the car. Odds are you won't need it again until it's time to drive back home. Situated in areas where there is a sustainable local market, Great Wolf should be doing much better than it is if vacationers are worried about the tank-testing road trip.
So, there you have it. Seven stocks that may not only survive those pesky gas prices but actually thrive in the face of them. It should come as no surprise that two of these stocks -- Overstock and Great Wolf -- have been recommended in our Motley Fool Rule Breakers newsletter service. One is no longer an active recommendation, but the same spirit that drives these seven stocks to such an unconventional path to prominence -- profiting from what other companies see as a pitfall -- is what defines the ultimate growth stock investing philosophy.
Want to fill 'er up at the stock tank? Consider a free trial subscription to Rule Breakers. You may find some wild possibilities there. How's that for having a tiger in your tank?
Amazon and Netflix are Motley Fool Stock Advisor recommendations.
Longtime Fool contributor Rick Munarriz is glad that he's putting fewer miles on his car these days. He does own shares in Netflix and Great Wolf. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
