As you know, I'm a very strong proponent of the reopening trade. Institutional investors have $3.1 trillion in dry powder ready to deploy. Consumers have trillions of dollars more to spend when cities and states reopen. On Thursday, New York City announced it will reopen - FULLY - on July 1. I've already booked my flight to visit my friends and colleagues.
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|  Dear Reader, As you know, I'm a very strong proponent of the reopening trade.
Institutional investors have $3.1 trillion in dry powder ready to deploy.
Consumers have trillions of dollars more to spend when cities and states reopen. On Thursday, New York City announced it will reopen - FULLY - on July 1.
I've already booked my flight to visit my friends and colleagues.
TripAdvisor says that 67% of Americans plan to travel this summer.
It's going to be a wild summer. Spending will be incredible. It's already off to a strong start.
Yesterday, we learned that GDP reached 6.4% in the first quarter. That figure could top 10% in the second quarter.
I'm on the record already saying that GDP will hit 7% this year.
In an economy that is 70% reliant on consumers, it will be bigger and bolder.
But there is a carryover from the crisis that many people have ignored. There's a sport that has found renewed popularity.
And combining it with the reopening makes for a fascinating trade.
Driving Toward the Reopening
People will drive their cars to vacation.
But they'll also drive golf balls on the course and at the driving range. The sport renewed popularity as an outdoor activity.
In 2020, rounds of golf increased by 14%, year-over-year, according to Golf Datatech. People were out playing 18 holes quite a bit. And, the same dataset shows that equipment sales increased by 10%.
Now, let's combine this trend with the reopening trade.
That brings me to Drive Shack. The New York based firm owns outdoor driving ranges and miniature golf courses.
Doesn't sound too groundbreaking until you add in the full bar, the restaurant, and the music.
People will be flocking here.
They directly compete with Top Golf, which is owned by Calloway (ELY) and operates similar facilities. Drive Shack owns facilities in Orlando, Raleigh, West Palm Beach, and Richmond.
They'll likely expand into new locations later this summer. With deep-pocketed institutional investors - and a lot of interest in this company - I expect the company will become a momentum stock.
At $3.51 per share, you can't go wrong. But you can use the leverage effect of options to make even stronger gains.
For example, you can buy the August 20, 2021 $2.50 Call option for $1.15 to $1.20. This means that you can enjoy the leverage of a call option and control the rights to 100 shares for $1.15 per contract.
As a result, you'd pay 100 x $1.15 or $115 for the right to buy these shares on August 20 at $2.50 per share.
That's a much better use of capital today than buying 100 shares at $3.51 per share (a total of $351).
Should the stock increase to $3.66 based on that call option, your position will be profitable (with a lower upfront cost).
Should the stock climb, you can sell your contract before expiry and enjoy the same gains that you would by owning the underlying stock.
Now is the time to combine this incredible leverage benefit of options with the Reopening Trade. Go here to get my favorite 8 picks for the reopening trade and start trading right away.
Best Regards, |
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