Category: Stock Market

July 27, 2021 Cannabis, General Ag News and Notes, Stock Market Post a Comment

Millennium Investment & Acquisition Co. Inc. Provides Corporate Update

Currently, MILC has invested in operating companies with two areas of focus:
1) Sustainable cultivation of Cannabis in Greenhouses through Millennium Cannabis
2) Sustainable production of Activated Carbon through Millennium Carbon

Millennium Cannabis

MillCann has identified greenhouse cultivation as the sustainable method for growing cannabis in a cost-effective manner with a lower carbon footprint than indoor cultivation. Historically, cannabis in the United States has been grown indoors and this trend has continued even as various States have implemented legalization. MillCann believes that its strategy of focusing on greenhouse cultivation represents a competitive advantage. Greenhouses cost less to construct and less to operate than indoor cultivation facilities and as such, we believe MillCann can compete favorably with this approach.

The cannabis industry is experiencing rapidly growing demand amid the tailwind of increasing legalization at the State level. The inefficient availability of capital in the cannabis industry given the illegal status at the federal level presents an opportunity for MillCann as it has efficient access to capital through its strategic affiliation with Power REIT (NYSE-American ticker: PW and PW.A) which is focused on financing the real estate component of controlled environment agriculture (CEA) facilities in the form of greenhouses. As a result, MillCann is able to establish operations efficiently as it has done with its first two transactions.

To date, MillCann has commenced operations in Walsenburg, Colorado and Vinita, Oklahoma and is actively pursuing further expansion of its activities related to the sustainable cultivation of cannabis. As part of establishing these two operations, MillCann has rapidly put together an experienced team of greenhouse cannabis cultivation experts. The team is led by Jared Schrader who has significant experience consulting for financial institutions including private and public banks, hedge funds, and REITs. In this role he developed operational strategies and software, performed due diligence of asset purchases, monitored performance of portfolios and handled sales through securitizations. Within the Cannabis industry, Mr. Schrader has a solid track record growing revenue at a southern Colorado cultivation facility from $150,000 annually to over $150,000 weekly (i.e. > $8 million annually) across the span of two years.

Walsenburg, Colorado

On May 24, 2021, MILC announced that it entered into a transaction that represents a new area of focus MILC related to sustainable Cannabis cultivation in greenhouses by investing in a newly formed cannabis operator, Walsenburg Cannabis LLC (“WC”). MILC’s total capital commitment to the project is $750,000. As part of the transaction, MILC agreed to lend capital to WC for its business operations and MILC is in the process of obtaining regulatory approvals for holding cannabis licenses in Colorado. Upon receiving regulatory approval, it is contemplated that MILC will become the majority owner of WC in the form of a 77.5% preferred equity ownership stake.

Simultaneous with MILC’s investment, WC entered into a long-term lease (the “Lease”) of a 22.2 acre property (the “WC Property”) in Walsenburg, Colorado with Power REIT. The Property has substantial existing improvements including existing greenhouse and processing space. As part of the Lease, Power REIT, has agreed to fund the rehabilitation of the existing improvements and the construction of additional greenhouse space. Upon completion, which is targeted for this fall, the WC Property will have a total of approximately 102,800 square feet of greenhouse and related space.

The Walsenburg cannabis campus was a distressed acquisition of a facility that had ceased operations. MILC believes that it was acquired at an attractive basis relative to the in-place improvements which provide an attractive opportunity to immediately commercialize the facility for cannabis cultivation. MILC believes that this property has significant potential to become a large-scale, low-cost producer of high-quality cannabis to compete effectively in the Colorado market.

The campus is subdivided into five parcels which allows for a significant availability of plant count based on how the Colorado Marijuana licensing works. We currently anticipate an 11,500 plant count per cultivation and we are targeting four crop cycles in Walsenburg. We intends to seek to increase the allowable plant count as Colorado licensing permits. It is possible that we will be able to increase the plant count during 2022.

Vinita, OK

On June 11, 2021, MILC announced that it has agreed to invest in a newly formed cannabis operator – VinCann LLC (“VC”). As part of the transaction, MILC agreed to invest $750,000 in the form of a controlling preferred equity interest whereby MILC receives a full return of its invested capital plus a preferred return of 12.5% after which MILC has a 77.5% ownership stake. The remaining subordinated ownership is held by the management team of VC.

Simultaneous with MILC’s investment, VC entered into a 20-year lease for a 9.35 acre property in Vinita, Oklahoma with approximately 40,000 square feet of greenhouse, 3,000 square feet of office space, and 100,000 square feet of fully fenced outdoor growing area with 20,000+ square feet of hoop structures that have been purchased by Power REIT.

The Vinita facility was a distressed acquisition purchased from an undercapitalized operator. Strong in-place infrastructure and the operational status upon acquisition allows for rapid speed to revenue. MILC believes that it was acquired at an attractive basis relative to the in-place improvements which provide an attractive opportunity to immediately commercialize the facility for cannabis cultivation. MILC believes that this property has significant potential to become a large-scale, low-cost producer of high-quality cannabis to compete effectively in the Oklahoma market. The targeted total plant count cultivation in 2022 for the greenhouse and outdoor, respectively, are 26,000 and 50,000 per year.

David Lesser, MILC’s Chairman and CEO, commented, “We are excited to provide an update regarding our new area of focus – sustainable cannabis cultivation in greenhouses. We are also proud of the rapid progress we are making at each site as well as the teams we are building. We are very focused on building teams that draw from the broader business community and people with a focus on greenhouse cultivation rather than just drawing from the cannabis industry. We are on track to report initial revenue from these activities in the fourth quarter of 2021. We expect to ramp up significantly in 2020 as we seek to generate significant operating income from these operations.”

Jared Schrader, Millennium Cannabis’ President, commented, “The cannabis industry is growing at an incredible rate and our approach which is focused on low-cost and sustainable cultivation in greenhouses is paramount to a long-term and viable business model. Both of our current projects in Colorado and Oklahoma benefit from the potential for rapid speed to revenue. We are focused on bringing best in class, large-scale mainstream agricultural cultivation techniques to the cannabis industry. We are thankful to have best in class industry experts at Millennium Cannabis and are looking forward to growing the team as we take on more projects in more states.”

Millennium Carbon

Hawaii

In May, 2015, MILC acquired an activated carbon plant (the “MHC Plant”) out of bankruptcy at a steep discount to the original investment.

The MHC plant is intended to process a waste stream of macadamia nut shells into a special form of premium-grade activated carbon, which, due to its large surface area and complex network of pores, provides benefits in a variety of chemical processes including filtration, purification and energy storage. In particular, the activated carbon expected to be produced by the Plant was targeted for manufacturing electrical double-layer capacitors, which are commonly referred to as Ultracapacitors or Supercapacitors, an advanced energy storage alternative to traditional batteries. Ultracapacitors are found in a diverse array of electronic equipment from daily usage engine starting, hybrid and electric vehicles to windmills.

MHC successfully restored all production equipment and necessary support systems to operation and completed 31 trial run campaigns that produced over 60 tons of activated carbon. The process was iterative where MHC operated the plant for a couple of days to produce Activated Carbon and then performs laboratory testing. MHC produced some very high-grade material that would be attractive to ultracapacitor manufacturers. Unfortunately, MHC has also experienced significant variations in the quality of the material produced.

During the first half of 2019, MHC concluded that the existing carbonization reactor intended to remove volatile material and produce char was the culprit causing the inconsistent results. In evaluating alternatives, MHC concluded that it had identified a novel and potentially better approach to producing Activated Carbon. Based on this, MILC has made efforts to minimize overhead and cash drain at MHC while it evaluates alternatives for the project which may include repurposing the plant for other uses or a potential sale.

Kentucky

As described above, in evaluating operational issues at MHC, MILC identified a novel approach to producing Activated Carbon and determined to construct a pilot-plant as a proof of concept. This project is located in Kentucky and the initial feedstock is a waste stream that is available in large quantities from bourbon distilleries which is a large industry in Kentucky and which represents a significant waste problem that is impacting the industry. To build the pilot plant, MILC, through its wholly owned subsidiary, Millennium Carbon LLC (“MC”) purchased several used pieces of equipment at a fraction of the cost of new equipment in order to construct a plant capable of establishing the viability of the process beyond a “lab-scale” demonstration. To date, MC has operated this pilot plant and believes that the concept is valid and can be scaled to a commercial operation. MC is currently formulating a plan for a commercial scale Activated Carbon plant based on the experience with the pilot plant.

David Lesser, MILC’s Chairman and CEO, commented, “While we are disappointed with the status of the Hawaii endeavor, we believe that the experience has led to what could be an extremely exciting opportunity to develop a sustainable approach to the production of activated carbon from waste materials. Typical production of activated carbon has a very high carbon footprint whereas we believe our model should have a negative carbon footprint. We look forward to continuing to develop this novel concept which should have applications beyond our initial waste stream feedstock.”

SMC Global

As previously announced, MILC has now completed the liquidation of its investment in SMC Global which represented its sole investment in securities.

Updated Investor Deck

MILC has posted an updated investor deck which is available on our website: http://www.millinvestment.com/

Deregistration as a 1940 Act Company

On October 14, 2020, shareholders approved a proposal to change the nature of the Company’s business from a registered investment company under the Investment Company Act of 1940 (the “1940 Act”) and to a holding company that focuses primarily on owning and operating businesses that produce activated carbon and acquiring other private businesses (collectively, the “Deregistration Proposal”). The Company is in the process of implementing the Deregistration Proposal so that it is no longer an “investment company” under the 1940 Act and has applied to the Securities and Exchange Commission (the “SEC”) for an order under the 1940 Act declaring that the Company has ceased to be an investment company (the “Deregistration Order”).

While the Company is committed to fully implementing the Deregistration Proposal, it is still contingent upon regulatory approval and the ability to reconfigure the Company’s portfolio to deregister as an investment company. The time required to reconfigure the Company’s portfolio could be impacted by, among other things, the COVID-19 pandemic and related market volatility, determinations to preserve capital, the Company’s ability to identify and execute on desirable acquisition opportunities, and applicable regulatory, lender and governance requirements. The conversion process could take up to 24 months; and there can be no assurance that the Deregistration Proposal, even if fully implemented, will improve the Company’s performance. Further, the SEC may determine not to grant the Company’s request for the Deregistration Order, which would materially change the Company’s plans for its business.

As previously announced, MILC has now completed the liquidation of its sole investment in securities – its investment in SMC and plans to invest the proceeds in operating businesses.

ABOUT MILLENNIUM INVESTMENT & ACQUISITION COMPANY INC.

Millennium Investment and Acquisition Co. Inc. (ticker: MILC) is an internally managed, non-diversified, closed-end investment company. During 2020, MILC announced that it was seeking to de-register as an Investment Company that is regulated under Investment Company Act of 1940. MILC is currently seeking an Order from the SEC declaring that it has ceased to be an Investment Company as it no longer meets the definition of holding itself out as investing in securities but rather has pivoted to focus on direct investments in operating businesses.

MILC is currently focusing on opportunities in sustainable cannabis cultivation and sustainable production of activated carbon.

Additional information about MILC can be found on its website: www.millinvestment.com

ABOUT POWER REIT

Power REIT is a specialized real estate investment trust (REIT) that owns sustainable real estate related to infrastructure assets including properties for Controlled Environment Agriculture, Renewable Energy and Transportation. Power REIT is actively seeking to expand its real estate portfolio related to Controlled Environment Agriculture for the cultivation of food and cannabis.

Power REIT is focuses on the “Triple Bottom Line” with a commitment to Profit, Planet and People.

Additional information about Power REIT can be found on its website: www.pwreit.com

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This document includes forward-looking statements within the meaning of the U.S. securities laws. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words “believe,” “expect,” “will,” “anticipate,” “intend,” “estimate,” “project,” “plan,” “assume”, “seek” or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words. All statements contained in this document regarding our future strategy, future operations, future prospects, the future of our industries and results that might be obtained by pursuing management’s current or future plans and objectives are forward-looking statements. You should not place undue reliance on any forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our forward-looking statements are based on the information currently available to us and speak only as of the date of the filing of this document. Over time, our actual results, performance, financial condition or achievements may differ from the anticipated results, performance, financial condition or achievements that are expressed or implied by our forward-looking statements, and such differences may be significant and materially adverse to our security holders.

April 6, 2021 General Ag News and Notes, Mahi Pono, PSP Investments, Stock Market Post a Comment

PSP and Trinitas Accused of Greenwashing Hawaiian ESG Investment

Institutional Investor –
by Julie Segal –

A Canadian pension fund and its private equity partner come under fire. –

Canada’s PSP Investments, which invests for the Public Sector Pension Investment Board, is under fire for greenwashing a sustainable investment in Hawaii. –

Responsible Markets, a 20-year-old consulting firm in Hawaii focused on the environmental, social, and governance impact of investments, has published a detailed case study arguing that PSP’s $600 million investment through a joint venture called Mahi Pono in a former sugar plantation in Maui, Hawaii is not in accord with PSP’s own ESG standards.

The findings from the year-long research project comes as a critical mass of pensions, endowments, and other institutions publicly commit to investments that meet comprehensive ESG and sustainability goals as well as financial returns. Asset managers, especially those in the U.S, are scrambling to keep up.

The allegations of greenwashing illustrate the complexity of sustainable and ESG investing, particularly when external managers are used.

Mahi Pono, a farming venture between the Public Sector Pension Investment Board and Pomona Farming, a subsidiary of private equity firm Trinitas Partners, purchased the 41,000 acres of farmland in Hawaii in December 2018. At the time, PSP said that, among other things, the deal would ensure that the land would continue to be used for agriculture, that green space would be preserved in Central Maui, and that the acreage would be a long-term source of revenue for the local economy. The project was also intended to create food security for residents and local jobs.

But Responsible Markets argues that Mahi Pono depends on securing water at rates that are exploitative to indigenous Hawaiians and diverts water from local farmland.

“Rather than creating local food security as the company has promised, the Mahi Pono business plan is dependent on export crops,” wrote Shay Chan Hodges, a co-organizer of Responsible Markets’ initiative, the Maui ESG Project, and co-author of the report. “Additionally, the company operates secretively and with little transparency, and has failed to generate the number of jobs promised.”

According to the report, called “From the Mountains to the Sea: When Big Money Moved in on Maui’s Agriculture,” PSP Investments and its external manager use the language of ESG and impact investments, but the results haven’t yielded benefits in line with that narrative.

Ryon Paton, president of Pomona Farming and Executive Chairman of Mahi Pono, said the project is enormously complex and still in its infancy. For example, the project involves investing $30 million to upgrade an old gravity-fed water system that was in disrepair. “The overarching goal is to provide clean foods to the local Hawaiian market and for export,” he said. Paton added that rates paid for water are determined in a public forum and the manager has filed an environmental impact statement. The manager is now in the process of responding to 500 comments it has received from the public. “The long-term lease rationalization process is public and anybody can bid on the right to the water. We don’t negotiate that directly,” he said.

[II Deep Dive: ‘I Will Get Very Serious About ESG — But Not Yet,’ Allocators Claim]

Responsible Markets wants PSP to meet with the community in Maui to understand the problems that the project is causing, as well as what it calls missed opportunities. It also lays part of the blame on PSP’s engagement of an external manager. “True community intelligence is invaluable and cannot be outsourced to investment managers and advisors,” according to the report.

The case study alleges that Trinitas has a history of making questionable sustainable investments, particularly when it comes to water. According to the report, “Trinitas Partners and their affiliates have shown themselves to be masters of sustainable investment rhetoric, [but] the on the ground realities of their agricultural investments show a much more complex picture.” The case study outlines a deal that the partners executed in California, which converted land from vineyards and other crops into almond farms. Almond farming has become a hot button issue in California as these farms use significant amounts of water. Paton stressed that its orchards in California have received the highest level of sustainable certifications.

“Capital markets have become so intermediated that it’s difficult for investment professionals within a large institution to understand what’s happening on the ground,” Delilah Rothenberg, founder of Development Capital Strategies, an advisory firm specializing in sustainable and responsible investment, told II. “A lot of investors do hide behind the excuse of using external managers until there’s enough of a backlash where they have to address the issues,” she added. Rothenberg isn’t familiar with PSP’s Maui investments and couldn’t comment on the case study in particular.

March 13, 2021 General Ag News and Notes, REIT, Stock Market Post a Comment

10 Best Dividend Stocks For 2021

Insider Monkey –
by Fahad Saleem –

8. Realty Income Corporation (NYSE: O) –
Dividend Yield: 4.55% –
Number of Hedge Fund Holders: 24 –

Realty Income Corporation is one of the best dividend stocks to for 2021. The REIT buys and sells properties, and offers services like portfolio management, asset management, credit and real estate research. The company in February said that it expects strong acquisition volume of more than $3.25 billion, or $3.44-$3.49 per share in terms of FFO, in 2021, above the average analyst estimate of $3.43. The company recently bought a 21-asset gas station and convenience store portfolio in Hawaii from Par Pacific Holdings for $109.4 million.

With a $61.4 million stake in Realty Income Corp., Two Sigma Advisors owns 987,364 shares of the company as of the end of the fourth quarter of 2020. Our database shows that 24 hedge funds held stakes in Realty Income Corp. as of the end of the fourth quarter.

March 3, 2021 General Ag News and Notes, Stock Market Post a Comment

Maui Land narrows loss while it awaits land sale

Star Advertiser –
By Andrew Gomes –

Maui Land & Pineapple Co. generated less revenue last year amid the coronavirus pandemic but reduced its bottom-line loss from 2019. –

The company, which developed Kapalua Resort and once farmed pineapple but now mainly leases former plantation lands to tenants, lost $2.6 million last year, compared with a $10.4 million loss the year before, according to an annual report released Tuesday.

Maui Land said disruptions to tourism on Maui because of COVID-19 hurt company revenue from real estate leases as well as a club membership program that contributed to revenue falling 25% to $7.5 million last year from $10 million the year before.

However, the company’s 2019 loss was bigger because of two extraordinary items: a contested $5 million tax refund allowance and a $3.6 million noncash charge for reducing the value of some real estate.

Last year Maui Land offset some of its leasing revenue decline with the sale of 5 acres of agricultural land for $600,000. The buyer, Maui County, plans to use the land to expand its Lahaina wastewater system. Maui Land also received $900,000 as returned cash collateral from an insurance program of dissolved timeshare joint-venture development firm Kapalua Bay Holdings.

Maui Land anticipated selling 46 acres at Kapalua Resort for $43.9 million last year, but the deal didn’t close as expected in September because of COVID-19 restrictions. The company said selling the property, which has long been planned for residential and commercial development, is now expected to happen in mid-August.

The Kapalua-based company with 17 employees also tried to improve its finances last year with a potentially forgivable $246,500 federal Paycheck Protection Program loan but decided to return the loan proceeds based on guidance from the U.S. Small Business Administration that intended for the program to help small businesses that lack significant access to capital.

Maui Land’s financial results last year included a $740,000 fourth-quarter loss on $2.1 million in revenue that compared with a 2019 fourth-quarter loss of $9.1 million on $2.5 million in revenue.

Shares of Maui Land stock on the New York Stock Exchange closed Tuesday at $11.73. Shares over the last 52 weeks have closed between $13.50 on March 4 and $8.92 on March 23.

January 1, 2021 General Ag News and Notes, Hawaii Maritime Shipping, Jones Act, Shipping, Stock Market Post a Comment

Zim files papers to start 2021 with New York shipping IPO

TradeWinds –
By Eric Martin –

Fundraiser could seek $100m as Israeli operator seeks access to public equity markets.

Zim Integrated Shipping Services has filed papers to launch an initial public offering in New York, in a bid to make good on long mooted plans to go public.

The Israeli containership operator aims to list its shares on the New York Stock Exchange, where it will trade under ticker symbol ZIM, in a move that, if successful, would break a long absence of shipping IPOs on US capital markets.

The Haifa-based company did not give a timing for the IPO but pencilled in the aggregate value for the potential share sale at $100m.

Zim said that the main goal of the effort is to add to working capital and to create a public market for its shares, which would allow it to access equity markets in the future.

“We intend to use the net proceeds from this offering to support long-term growth initiatives, including investing in vessels, containers and other digital initiatives, to strengthen our capital structure, to foster financial flexibility and for general corporate purposes,” the outfit said in a draft prospectus.

The effort is backed by banks Citigroup, Goldman Sachs and Barclays as global coordinators, with Jefferies and Clarksons Platou Securities on board as joint bookrunners for the offering, according to the document.

A listing in New York would make Zim the second container liner operator listed on US stock markets, alongside Hawaii’s Matson.

International profile

Unlike Matson, which owns its vessels and is mostly focused on protected US trades, Zim brings a mostly chartered-in fleet and a global profile. It is ranked as the 10th largest operator by aggregate fleet capacity.

Its unique profile relative to other US-listed shipping stocks could work to advantage.

“The market loves logistics and hates the shippers [shipping companies], most of which erroneously get lumped into the same bucket as tankers and correlate with energy,” said J Mintzmyer, lead researcher at Value Investor’s Edge.

“I think Zim has a good chance to help break this cycle by clearly pitching the global logistics business, plus the timing is perfect as we’re in the middle of the biggest containership boom in a decade.”

Eli Glickman-led Zim, which recorded a record profit in the third quarter amid booming box rates, had made no secret of its intentions to go public. The company was reportedly eyeing London and New York as potential locations for a listing, apparently choosing latter.

“We are a global, asset-light container liner shipping company with leadership positions in niche markets where we believe we have distinct competitive advantages that allow us to maximize our market position and profitability,” Zim said in the draft prospectus filed with the US Securities and exchange commission.

The company owns just one vessel, with its remaining 69 ships brought in through charter deals, the IPO papers show.

Zim operates 66 weekly lines serving 310 ports in 80 countries. The company, which carried 2.82m teu in cargo last year, has an aggregate fleet capacity of 359,000 teu.

The company’s largest shareholder is Idan Ofer’s Kenon Holdings, which holds a 32% slice. Deutsche Bank owns 16.7% of Zim’s shares, while Greek containership owner Danaos holds 10.2%.

December 7, 2020 General Ag News and Notes, Stock Market Post a Comment

7 Travel Stocks That May Have More Downside Ahead

InvestOrPlace –
By Josh Enomoto –

Despite warnings against mass travel issued by the Centers for Disease Control and Prevention, many Americans ignored such requests. In fact, as CNN recently reported that the Transportation Security Administration screened 1.17 million air passengers, a single-day record since the novel coronavirus pandemic began. At first glance, this appears to bode very well for travel stocks.

As the mainstream media constantly reminds us, we’re in the middle of a massive surge in new Covid-19 cases. At time of writing, the seven-day average of new daily infections is just under 160,000. Presumably, this figure will skyrocket as the uptick in travel and close contact with others raises overall vulnerability. As well, we’ve seen more than an average of 1,000 people succumb to the coronavirus over the past few weeks.

Yet that doesn’t seem to bother nearly as many people as you might assume, which initially appears a huge relief for travel stocks. Apparently, the power of cabin fever combined with Covid fatigue is enough to overcome fears of the pandemic. And sure enough, when you consider the probability of dying from SARS-CoV-2, the chances are incredibly slim.

Still, I wouldn’t go overboard on travel stocks just yet. According to data from CouponFollow.com, while Americans are eager to travel, many households have made drastic changes to their traveling methods due to Covid-19. Most notably, a majority (or 54%) plan to travel by car for the holidays this year, while plane and train travel represent 34% and 11%, respectively.

Further, Americans prefer to travel by car because of coronavirus fears, even when the travel distance increases significantly. For instance, slightly more than two-thirds of travelers prefer driving when the journey is less than 300 miles, which isn’t surprising. However, even when the distance is over 300 miles, a majority prefer cars over planes.

To give you some context, the distance from Los Angeles to Salt Lake City, Utah is about 690 miles, or nearly 11 hours of driving. From LA to Albuquerque, New Mexico is just under 800 miles, or 12-and-a-half hours of driving. If anything, it’s time to be skeptical about these travel stocks:

American Airlines (NASDAQ:AAL)
Spirit Airlines (NYSE:SAVE)
Hawaiian Holdings (NASDAQ:HA)
Park Hotels & Resorts (NYSE:PK)
Comcast (NASDAQ:CMCSA)
Ruth’s Hospitality Group (NASDAQ:RUTH)
Lyft (NASDAQ:LYFT)

To be fair, there’s a case to be made that this pandemic is on its last legs. Additionally, people eventually acclimate to their environment. That might be true. However, consumer sentiment indicates that people are shifting their purchasing behaviors and not necessarily in a manner conducive for leisure. Therefore, certain travel stocks may face downside risk before their trajectory improves.

Travel Stocks to Sell:

American Airlines (AAL)
It doesn’t take a rocket scientist to understand why the airline industry crumbled amid the coronavirus outbreak. However, as we near the dubious one-year anniversary of the global crisis, people everywhere have gradually adjusted to the new normal. In theory, this should help support American Airlines. Indeed, AAL stock has jumped over 27% in the trailing six-month period.

But is that enough to justify travel stocks exposed to the airliner industry? Of course, air travel itself will be a viable business. Unless we invent a new form of global transportation, flying remains the most convenient and often times cost effective method. However, the sector could become a game of musical chairs, not unlike what we’re seeing in the oil market. That wouldn’t bode well for AAL stock, which has a huge debt load relative to the competition.

Moreover, how would that debt load impact its ambitions post-pandemic? More than likely, the competition will be eager to aggressively push promotions and routes to claw back lost revenues. But American Airlines won’t have as much leverage than its rivals. That makes AAL stock risky, even if other travel stocks pick up based on consumers shedding Covid-19 fears.

Spirit Airlines (SAVE)
On the surface, Spirit Airlines should be one of the travel stocks to buy. If the coronavirus was just a matter of a health risk, deciding which airliner to buy might as well be a blind wager. However, because this is an economic crisis, SAVE stock stands out positively. After all, if travelers have already gotten over their fears of Covid-19, then the only hurdle they must traverse is the financial one.

Further, that’s what data from CouponFollow.com suggests: “64% of travelers said they’ve budgeted more money for travel this year than they did last year.” While that’s encouraging, on the flipside, “23% of people said they can’t afford to travel this year.” In other words, the economy for Spirit Airlines’ target demographic has gotten significantly weaker. Logically, this would likely be a headwind for SAVE stock.

Another factor to consider is the possible K-shaped economic recovery. This crisis has resulted in a bifurcated environment where the well to do have enjoyed a budget increase (i.e., no commuting), whereas lower-income households have badly struggled. If the rich represent the most air passengers, they may opt for airliners that can provide superior services.

Hawaiian Holdings (HA)
Among travel stocks, Hawaiian Holdings may actually hold the dubious distinction of garnering the most skepticism. Under any other circumstance, Hawaii is a dream destination, a literal island paradise. All other things being equal, such a place might be the ideal location for waiting out the coronavirus pandemic. Naturally, that’s exactly what Hawaiian officials realized, thus implementing strict travel protocols.

Unfortunately, Hawaii’s actions don’t occur in a vacuum. By that, I mean Hawaii’s economy is substantially tied to tourism, with the industry accounting for roughly 23% of local economic activity. But with Covid-19 fears spreading everywhere, few people wanted to up and travel to the island state. Of course, this has been devastating for HA stock.

Fundamentally, the crisis will continue to weigh disproportionately on Hawaiian. According to the Bureau of Transportation Statistics, the average passenger load factor for all American carriers was 49% in August. For Hawaiian Airlines, it was a devastating 23.7%.

Back in 2019, the average load factor for the beleaguered company was over 87%, in line with other airliners. Put another way, rising Covid-19 cases is no laughing matter for HA stock.

Park Hotels & Resorts (PK)
Another example of travel stocks that seemingly should do well in the present environment is Park Hotels & Resorts. As I stated earlier, a post-coronavirus record number of travelers hit the road and the friendly skies over Thanksgiving weekend. In theory, this should bode well for PK stock. Park Hotels & Resorts is a real-estate investment trust specializing in high-profile lodgings.

While shares have jumped higher over the trailing month — we’re talking about 60% up — prospective investors should be cautious. True, rich people are traveling but just as many are staying home. As evidence, you can look at the meteoric rise of Peloton Interactive (NASDAQ:PTON) during this Covid-19 pandemic. Yes, affluent people have access to gym memberships but they’re eschewing that for at-home exercise equipment.

In addition, the overwhelming use of personal vehicles over air travel suggests that many traveling consumers are on a budget. Plus, they might be more sensitive to Covid-19 fears; hence, the method of travel.

Therefore, hotel investments like PK stock might not fare well if coronavirus cases worsen. And the price point that the underlying lodgings command makes it out of the question for many travelers.

Comcast (CMCSA)
If I had to cast a vote for worst governor in the history of the United States, my vote would go to none other than California’s Gavin Newsom. If you like him, it’s probably because you don’t live in California. He and the activist arm of the Democrats appear hellbent on destroying the state’s economy by considering more draconian stay-at-home orders.

Of course, the rules don’t apply to Gavin Newsom. But they do apply to businesses of every size, including massive ones like Comcast. And that is going to be a tricky problem for CMCSA stock.

In the pre-Covid days, Comcast represented one of the more viable travel stocks. With prime theme parks located in almost-always sunny California (and Florida during non-hurricane seasons), CMCSA stock at the right price offered a solid anchor for your portfolio. But with California-based assets shut down, this was a shock to the system.

True, Comcast isn’t as heavily levered to theme parks as rival Disney (NYSE:DIS). But over the long term, Disney’s arguably more enviable entertainment brands provide a comparatively robust pathway to recovery. Therefore, investors ought to be careful, especially if cases worsen nationwide.

Ruth’s Hospitality Group (RUTH)
As one of the premiere restaurant companies, Ruth’s Hospitality Group generally enjoyed positive returns for three-quarters of President Trump’s administration. Thanks to record-low unemployment across most demographics, RUTH stock benefitted tremendously from this most bullish of bull markets. Sadly, not even Ruth’s wealthy clientele could save shares from the destruction seen in other travel stocks.

A New York Times article this past summer helps explain why. According to the report, the top 25% in income level reduced their spending the most during the initial onslaught of the coronavirus. This action invariably left out service workers in the cold, who depended on their patronage. Therefore, we can assume that a similar headwind impacted RUTH stock.

After all, when you’re in one of these swanky restaurants, it’s not just about the food that makes the place special. It’s a moment to be seen by others, a hallmark of great financial success. With that element gone, Ruth’s business took a hit. Moreover, with many people traveling on a budget, they’ll likely eschew Ruth’s for any old eatery.

Lyft (LYFT)
Prior to the pandemic, the ride-sharing sector represented one of the most promising travel stocks. Suddenly, anybody with a properly functioning car and a smartphone could become a taxi driver and on their terms. The creation of a new revenue channel that is conveniently available to all initially boosted interest in companies like Lyft. However, the pandemic was exactly what LYFT stock didn’t need.

As people began sheltering in place, the ride-sharing sector careened to a halt. Even after the initial recovery from the March doldrums, LYFT stock meandered aimlessly for several months. However, with the electoral victory of Joe Biden (though this is still contested, to be fair), LYFT finally enjoyed price action worthy of its ticker name.

Unfortunately, recent sessions indicate that shares may have some problems moving higher. As I pointed out earlier, consumer data indicates that many people are traveling by car, even for incredibly long distances. That’s hugely problematic for Lyft as demand for air and train travel take a backseat. Although shares may eventually recover, the current circumstances warrant caution.