Navigating Economic Uncertainty: Strategic Stock Adjustments for a Changing Season

D.R. Barton, Jr.

Amid this summer's economic pain, continued cases of COVID-19, and lockdown restrictions, the outdoors have been a bright spot.

For individuals, it's where we've been able to see friends and family without too much risk of catching COVID-19.

For bars, restaurants, and cafes, the open air has allowed them to serve customers and take in a little money.

Now, fall is settling in and temperatures are dropping. Especially in northern states, that's going to make the outside much less appealing.

Indeed, COVID-19 is already resurging - reaching the inside of the White House, as we learned Friday - and people moving indoors will only make it worse by increasing the risk of exposure. This is going to have a huge impact on businesses that are already struggling.

In fact, four sectors are going to be hit hard this fall and winter.

And if you're not on guard, your portfolio could take a hit, too.

Unless you get out of these six stocks now and hedge accordingly - which is why I've put together my "Winter Survival Plan" to ensure your portfolio is well-insulated this winter...

COVID-19's Fall Wave Is Already Here

Back in spring, experts were hoping that we'd be able to clamp down on COVID-19 hard enough to keep it manageable.

Some European countries did. But here in the United States, cases never came down as much as experts said was needed before fall arrived.

Now, COVID-19 is on the rise again, both here and in much of Western Europe. Take a look at this chart of daily new confirmed COVID-19 cases per million people:

Source: https://ourworldindata.org/coronavirus-data-explorer

As you can see, America's initial COVID-19 surge, when adjusted for the number of people in America, wasn't as large as Spain's, but comparable to Italy's.

After that initial surge, Western Europe managed to push COVID-19 cases down over the summer through strict measures.

Here in the United States, cases slowly drifted down until late June, when they surged again.

Now that colder weather is setting in across the Northern Hemisphere, France, Spain, the UK, and America are all seeing another rise in cases. Germany and Italy's cases are also rising, but much slower.

Epidemiologists think this comes from a combination of people growing tired of COVID-19 restrictions combined with colder weather pushing people indoors.

And as we know, the COVID-19 virus spreads much easier indoors. Unfortunately, since the United States never pushed its cases down, we're starting from a higher number than Western Europe.

So we may very well be in for another large spike in COVID-19 cases, perhaps as bad as the one last spring.

A fall resurgence is bad news for many of the bars, restaurants, and cafes that have managed to stay afloat over the summer by using outdoor seating, especially in northern states.

Even in some warmer states where outdoor seating is possible all-year round, another COVID-19 surge will still drive down business in bars and restaurants. Florida may be hit extra hard despite its warm climate, as the state recently announced that it's lifting all restrictions on bars and restaurants.

In short, the lifeline that has kept the restaurant sector afloat over the summer could soon be taken away. While there aren't that many bar and full-service restaurant stocks, this will heavily impact the beverage industry that supplies bars and restaurants.

And with sports stadiums still mostly closed or at 20% capacity at best, alcoholic beverage companies are going to continue to struggle.

The stock to avoid, short, or buy puts on here is Molson Coors Beverage Co. (NYSE: TAP), America's second-largest and the world's fifth-largest brewer. Its ever-popular Coors Light and Miller Lite brands are very sports-gathering oriented, and the company's chart shows that traders believe that will continue to struggle:

But beer sales aren't the only thing that will change...

Nowhere to Spend Money Amid Cold and COVID

The bar and restaurant sector isn't the only one that benefitted from the warm summer weather. Outdoor shows and events - like crafts fairs and farmers' markets - were held outside where social distancing was possible.

Some even felt brave enough to take up air travel over the summer, as you can see in this chart of commercial air traffic in the United States:

Source: https://www.flightradar24.com/data/statistics

Despite the clear uptick since the March low, flight numbers never recovered even to last year's levels, and they look to be falling rapidly again.

And the reality may be a bit worse than shown in this chart, which measures both passenger and cargo flights together. That means the drop in passenger flights may be partially hidden by rising numbers of cargo flights.

In any event, another spike in COVID-19 cases combined with colder weather will end even this minor comeback. The same is true for events, shows, movie theaters, casinos, and much of the rest of the entertainment, hospitality, and travel industries.

A good stock to avoid, and potentially buy puts on, is US Global Jets ETF (NYSEArca: JETS). This ETF tracks airlines, airports, and terminal service companies, which will all have a long road to recovery and could get hit hard with a renewed COVID-19 surge.

Meanwhile, theme park-only stocks such as SeaWorld Entertainment Inc. (NYSE: SEAS), Cedar Fair LP (NYSE: FUN), and Six Flags Entertainment Corp. (NYSE: SIX) make excellent targets for puts right now.

As you'd imagine, since there's hardly anything left in these sectors to spend money on, American consumers are going to spend less money overall. And the reality of the slow return to amusement parks was highlighted by Walt Disney Co. (NYSE: DIS)'s announcement of 28,000 layoffs in its amusement parks division on Wednesday morning.

That's going to send ripples through the economy...

Don't Believe in Energy's Bounce

Less money being spent on travel, events, and other nonessentials is going to have almost the same effects on the economy that we saw back in March.

In particular, a recovery in oil is not likely. BP Plc. (NYSE: BP) even put out a white paper suggesting that peak oil demand has already been hit.

Oil demand will remain low as many commuters make part-time or full-time "work from home" a more permanent reality. And with holiday air travel also likely to see a huge drop, the integrated oil companies will continue to flounder and fall.

And of course, with colder weather, brick-and-mortar stores are going to have an even harder time finding customers...

The Have-Nots of Retail Can't Catch a Break

Retail sales in America are already struggling. They were up by just 0.6% in August, which is half of July's number and much lower than the expected 1%.

More COVID-19 cases and colder weather will only make that worse.

That's going to make the have-nots of retail take another hit, while the haves get another boost. Dollar General Corp. (NYSE: DG) and Best Buy Co. Inc. (NYSE: BBY) have already shown that they're must-haves, with success after success amid the COVID-19 pandemic.

I'd look at them as prime targets for buying calls.

But for the have-not department stores like Nordstrom Inc. (NYSE: JWN) and Macy's Inc. (NYSE: M), there's no hope in sight. Look at buying puts on them instead.

And before you go, make sure you check out my colleague Shah Gilani's full list of the stocks to buy and the ones to avoid at all costs...

You see, almost no one realizes, but some of the most dangerous, portfolio-wrecking stocks are also some of the most popular picks on the market. Our Chief Investment Strategist, Shah Gilani, is shining a light on the specific stocks that should be nowhere near your portfolio.

In this fast-paced lightning round event, he'll also detail the stocks that every investor in the world should have in their portfolio right now. This event could revolutionize how you make money this year...