Vacation stocks have a sunny side

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The vacation industry has begun to rebound in bookings, but the continuing economic difficulties and high unemployment rate means uncertainty in this sector.

Nicholas J.D. Olesen of The Philadelphia Group believes that until unemployment drops and discretionary spending rises, this sector will remain unattractive to the investor. However, Ed Butowsky of Chapwood Capital Investment Management believes that “well-run companies with diverse offerings and those that are willing to make deals and offer discounts for domestic travelers are best plays right now.” He singles out Accor Hotels (Paris Stock Exchange: AC; Price: $35.31), which is a hotel operator, and Walt Disney (NYSE: DIS; Price: $44.39), because both of these companies’ offerings appeal to the growing market of budget-conscious family vacationers.

If you’re interested in this sector, Olesen notes, the best month to invest, based on his review of the past 10 years, is July. July is when the majority of people travel and when the companies provide the best revisions to their earnings estimates for the year, he says. That means that if the company revises its earnings estimate downward, you’ll be able to take advantage when stock prices drop.