Best Travel Stocks That Should Be on Your Radar
COVID-19 has had a significant negative impact on the travel industry. With the Delta variant having travelers questioning their vacation plans, many companies have suffered a second wave of profit loss. This has no doubt caused investors to question what the best travel stocks to buy are, if any at all. Tons of travelers are postponing trips again. There are many reasons to be concerned about investing in travel stocks right now.
However, if you look towards the short-term, say six months from now, many analysts believe the travel industry will rebound. Even though many travelers are postponing, there are still a good number of people tired of being stuck at home and are eager to get out. When we start to see some sort of normalcy return, there are few best travel stocks that should be on your radar.
Best Travel Stocks
Delta Air Lines, Inc (NYSE: DAL)
Delta is a leader in domestic and international travel. It’s one of the major airlines of the U.S. Once again proving it deserves to be known as the leader in its industry. Delta has ranked number one in reliability and experience, putting it on top for the third year in a row.
With COVID-19 numbers on the rise, many companies in the air travel industry have been suffering. Delta has experienced much turbulence due to the pandemics cause of demand problems. However, many people are tired of continuing to cancel their long-awaited reunions with family and loved ones due to the Delta variant.
And according to a recent survey, 26% of people say they plan to travel in October. It won’t be long before people get that itch to travel again. And when they do, Delta will surely be on investors lists of best travel stocks. As people look to reconnect and explore new destinations, the travel industry stands to benefit. In the U.S., air travel has hit two million daily passengers. This number is much higher than the low of around 90,000 daily passengers in April 2020.
CEO, Ed Bastian sees a light at the end of the tunnel for Delta. He event went as far as to comment, “Domestic leisure travel is fully recovered to 2019 levels.” Individual business travel is at about 43% of 2019 levels, but analysts are confident it will climb back up to 79% in 2022. It’s expected to be at full recovery by 2024.
Nobody knows what’s going to happen. But when things start opening up again and people get antsy being cooped up indoors, there’s one thing a good number of them will want to do… travel. The travel industry will surely benefit from this and Delta stands to profit.
Airbnb (Nasdaq: ABNB)
Airbnb operates an online marketplace for lodging, with a focus on homestays for vacation rentals and tourism activities. After being hit hard by COVID-19, Airbnb is set to soar post-pandemic. It’s definitely a company that should be on your list of best travel stocks.
Due to the increase in remote workers, the company could stand to benefit in the long-term. The company reduced expenses, so it will likely operate more efficiently in the aftermath. As long as people have internet connection, they can work anywhere.
Even though its shares fell 30% over the past six months, analysts have been growing more bullish. Following the company’s earnings report last week, a few analysts reiterated buy ratings on the stock and increased their 12-month price targets. In addition, one analyst reaffirmed an outperform rating for shares.
Airbnb has been demonstrating strong cash flow. And paired with its scalable business model, a $93 billion market cap doesn’t seem too expensive for a growing company.
During a call with analysts, CEO Brian Chesky magnified the company’s sales growth, projecting that the Airbnb’s next quarter will be “our strongest revenue quarter ever.” He went on to say that it “speaks to the inherent resiliency of our business.”
Airbnb’s “funds receivable” account increased from $4.4 billion in Q2 of 2019 to $6.3 billion in Q2 of 2021. The account is defined as the amount that Airbnb holds on behalf of customers who have made a reservation for the future, but have not yet taken their trip. This 43% increase indicates that people are ready to travel, despite the Delta variant. And it makes a strong case for what’ll be happening six months from now.
Airbnb seems like a risk vs. reward scenario that’s worth taking.
Marriott International (Nasdaq: MAR)
What’s next for this hotel giant post-pandemic? According to Marriott CEO Tony Capuano, “We’re actually seeing really strong recovery of demand in a variety of our largest markets. He went on to say that “it’s not just leisure demand, which is the thing that is really encouraging for us.” This strong recovery might just be the deciding factor in investors considering it to be one of the best travel stocks this year.
COVID-19 caused historic levels of low occupancy for the travel and hotel industry. It prompted massive job cuts and hotel closures. Marriott, the world’s largest hotel operator, took a massive hit during the pandemic, recording its first full-year loss in more than a decade.
Like many of its competitors, the company has introduced new cleaning procedures to entice travelers. It even cut back on offerings in an effort to return to profitability. Marriott’s efforts were apparent in its second-quarter results. The company’s net income soared to $422 million from a net loss of $234 million just a year earlier.
Travelers are venturing out again. An estimated 48 million Americans traveled during the busy Fourth of July weekend. Yes, that was before COVID-19 cases began to spike again. But it’s only a matter of time before people begin traveling again and once business travel starts up again, hotels along with airlines will surely stand to profit.
Walt Disney Co (NYSE: DIS)
Disney is one company that has definitely been hit hard throughout the pandemic. When things were looking better and travel bans were being lifted, many travelers flocked to Disney with their friends and family. Disney recently saw a huge spike in sales and net income since before the pandemic. The multinational mass media and entertainment giant recently announced a 45% sales spike for the fiscal third quarter.
After being shutdown many times throughout these past 17 months, Disney’s parks are now open. The company instituted price increases at its parks that could make them more profitable than before the pandemic. With many travelers making Disney their vacation destination, it’s no wonder why investors are keeping this stock on their radar as one of the best travel stocks.
Theme parks and products revenue nearly quadrupled to $4.3 billion as resorts opened back up. Disney estimates the segment will see operating income increase by $2.2 billion in the current quarter. Analysts are expecting earnings per share (EPS) to rise 18% in the current fiscal year, followed by a 112% jump in fiscal 2022.
All of this uncertainty is creating an opportunity for long-term investors to buy Disney stock. The company will only continue to please its customers and investors, regardless of the volatility in the near term.
Investing in the Travel Industry
With so much uncertainty out there, there’s really no way of knowing what will happen in the near future. However, what we do know is that people will feel the need to take off and go on vacation. Being at home 24/7 has not been easy for everyone. Reports have already shown that travelers are putting on their exploring hats and are hiking or flying to their next adventure.
Delta, Airbnb, Marriott and Disney are the best travel stocks that stand to benefit from the new travel surge we will most likely be seeing in the short term. Many investors have been skeptical regarding the travel industry but when travel and tourism start picking back up, you will want to be positioned to profit.
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