In this article we will take a look at the 10 best travel stocks to buy right now.
The tourism sector has been perhaps the hardest hit part of the economy by the COVID-19 pandemic. According to estimates by the United Nations World Tourism Organization, tourism destinations worldwide welcomed 1 billion fewer international arrivals in 2020 when compared to the previous year, equating to a 74% drop that was the highest reported since records started being kept, even beating the fall due to the 2009 financial crisis. Travel restrictions are still in place in many parts of the world but there are signs of a recovery with the vaccine rollout.
Will Travel Stocks Rebound in 2021?
After an estimated $1.3 trillion in export revenue losses in 2020, there are still possible stumbling blocks to the recovery of the industry, like the spread of new variants of the virus and hesitant governments not willing to lift lockdown curbs. However, after promising results in vaccine trials, many are hopeful of things returning back to normal in 2021. However, a UN survey has cautioned that the industry does not expect a return to pre-pandemic highs until at least another two years.
Many sub-sectors of the tourism industry, like hotels, restaurants, and airlines bore the brunt of the COVID-19 losses over the past few months. With airplanes and cruise liners resuming operations in several parts of the world, and hotels reporting a boost in booking numbers, things are certainly looking up for tourism. It might be a good time to invest in travel stocks that are expected to grow in tandem with the vaccination campaigns in the United States, the United Kingdom, and other tourist spots in Central America and East Asia.
There is also the possibility that vaccine tourism takes off. Maldives, a popular tourist destination, is already offering the coronavirus vaccine to tourists who plan to visit the country. Activity at some of the best luxury hotels in the world is also returning. Other signs of a recovery include the increase in the number of people flying to international destinations, the opening of tourist hotspots like the Seychelles, and a rental car shortage in Florida and Hawaii, two domestically popular places for vacations in the US. There is even evidence to suggest that travel-related jobs have been increasing in the past few weeks.
The US Travel Association reports that the tourism sector gained more than 280,000 jobs in March, reducing the unemployment rate in the industry to 13%, which is still high compared to the national unemployment rate that stands at 6%, but a clear sign of a rebound in travel. Hedge fund sentiment around the travel industry has also picked up pace in the past couple of months, but there is reason to be a little cautious in blindly following the crowd. The unpredictability of the post-pandemic economy still has many stock experts baffled.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here are the top 10 best travel stocks to buy right now.
10. Airbnb, Inc. (NASDAQ: ABNB)
Number of Hedge Fund Holders: 68
Airbnb, Inc. (NASDAQ: ABNB) is a San Francisco-based company that connects users who want to book lodging for tourism, vacation, and other purposes with those renting places out. The company operates through a website and a mobile application. Airbnb went public in late December with a market cap of more than $86 billion. Share price has since climbed even higher and the market cap of the firm is now valued at over $100 billion.
In February, trading firm Susquehanna picked Airbnb as one of its top picks based on the first quarter earnings report of the company in 2021. The same day, investment bank Needham maintained a bullish view on the travel company stock with a Buy rating and upgraded the price target to $225 from $220.
At the end of the fourth quarter of 2020, 68 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in the firm.
9. TripAdvisor, Inc. (NASDAQ: TRIP)
Number of Hedge Fund Holders: 41
TripAdvisor, Inc. (NASDAQ: TRIP) is a Needham-based online travel company. The firm runs a website and mobile application that provide hotel reservations, as well as bookings for travel and restaurants. TripAdvisor is famous for user-generated content that compares the travel experiences of different hotels, shopping centers, and eateries. The firm has a market cap of more than $6.7 billion and posted an annual revenue of $604 million in December 2020, down from more than $1.5 billion the year before, as the pandemic hit the travel industry.
However, with the economy reopening, TripAdvisor is poised for a strong comeback. The company was founded in 2000 and is placed ninth on our list of 10 best travel stocks to buy right now. On March 2, investment advisory Citi upgraded TripAdvisor stock to Buy from Neutral and assigned it a price target of $62 based on a new subscription product the company was offering. Citi said the service could attract 10 million subscriptions and create $1 billion in revenue for the travel firm.
At the end of the fourth quarter of 2020, 41 hedge funds in the database of Insider Monkey held stakes worth $1 billion in the firm, up from 29 in the preceding quarter worth $716 million.
Tollymore Investment Partners, in their Q3 2020 Investor Letter said that they learned a valuable lesson from their TripAdvisor, Inc. (NASDAQ: TRIP) misassumptions that made them a ‘proverbial frog in the boiling water’. Here is what Tollymore Investment Partners has to say about TripAdvisor, Inc. in their Investor Letter:
“We used to believe that buying companies that have attractive long-term prospects, but which are facing short term, but surmountable, business problems was an attractive source of superior investment results. This may still be the case, but our investment history has demonstrated an inability to consistently profit from this.
The investments we made into TripAdvisor was, with hindsight, a bet on a revision of fundamental business progress that did not materialize. In such cases there exist winner take most potential economic outcomes, with demonstrable barriers to entry and an owner-operator business ethos.
It was our misassumption that a monopolistic outcome was unnecessary for outsized value creation. This was a philosophically inconsistent premise.
We considered TRIP part of a global duopoly in hotel meta. And in our view the principal competitor to TRIP’s product offering was the large portion of travel bookings and advertising still taking place offline. But we were too dismissive of the value that Google commands by being right at the top of the funnel for most hotel booking experiences. From this position Google has the power to inflate OTA and meta companies’ customer acquisition costs by replacing their organic results with ads or Google’s own inventory occupying the most valuable top-of-page real estate. As TRIP’s core hotel business stagnated, we were the proverbial frog in the boiling water.
The broader lesson here is that being a long-term investor does not mean you should not quit when you are wrong. The long-term investor badge of honour that many of us self-righteously parade around can really put our investment results in jeopardy by inhibiting the objective reasoning we are so fond of telling people we possess.”
8. Las Vegas Sands Corp. (NYSE: LVS)
Number of Hedge Fund Holders: 63
Las Vegas Sands Corp. (NYSE: LVS) is a Nevada-based casino and resort company. The firm runs gambling, convention and exhibition centers, as well as restaurants and clubs. It has stakes in an art and science museum in Singapore too. Some of the famous establishments the company runs include The Venetian Macao Resort Hotel, the Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Hotel Macao, among others. It was founded in 1988 and is placed eighth on our list of 10 best travel stocks to buy right now.
On April 22, the Bank of America remained cautious on the company after it released the earnings report for the first quarter of the year. It maintained a Neutral rating on Las Vegas Sands stock citing the slow pace of economic recovery in tourist spots like Macau and Las Vegas. As the vaccine rollout continues and visa restrictions ease gradually, the resort industry can expect to benefit from a boom in travel around the world in 2021.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Melvin Capital Management is a leading shareholder in the firm with more than 10.5 million shares worth more than $629 million.
7. Royal Caribbean Group (NYSE: RCL)
Number of Hedge Fund Holders: 37
Royal Caribbean Group (NYSE: RCL) is a Florida-based global cruise holding company. It owns and operates the Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises brands. These cruises travel to almost 1,000 different locations worldwide. The firm has 61 cruise ships under its command that can hold more than 130,000 people. Royal Caribbean was founded in 1968 and is placed seventh on our list of 10 best travel stocks to buy right now.
On April 19, the CEO of the firm, Richard Fain, said that there had been progress made in dialogue with the US government over the withdrawal of a no-sail order in US ports put in place during the height of the COVID-19 crisis. Fain said cruise liners had resumed operations in more than 30 countries after the vaccine rollout and the US was expected to life the no-sail order soon, giving the company a much-needed revenue boost after the lows of 2020.
At the end of the fourth quarter of 2020, 37 hedge funds in the database of Insider Monkey held stakes worth $554 million in the firm, up from 30 in the preceding quarter worth $418 million.
In one of their investor letters, Tidefall Capital Management highlighted a few stocks and Royal Caribbean Cruises Ltd (NYSE:RCL) is one of them. Here is what Tidefall Capital Management said:
“Part of our positive return was due to our purchase of put options on Royal Carribean stock as a form of portfolio insurance. These options gave us the right to sell the stock at $40 in June; at the time the stock was $65. Given the lethality of Covid-19 and the heightened risk to the older customer base of cruise passengers, the put options priced at $2.74 appeared to offer a case of ‘heads I lose a little, tails I win a lot.’ (The most we could have lost was 2% of the fund). Government support seemed unlikely since all major cruise operators are incorporated abroad to avoid paying US corporate income taxes. Fortunately, in one week Royal Caribbean stock declined by more than half to $30 and the options increased in value to $15.30, more than five times our cost.”
6. The Boeing Company (NYSE: BA)
Number of Hedge Fund Holders: 55
The Boeing Company (NYSE: BA) is a Chicago-based aircraft manufacturer. Boeing also makes and sells rockets, satellites, telecommunications equipment, and missiles. The company has been hit hard by the pandemic as orders for new aircraft dried up from around the world due to the restrictions on air travel. After controversy over safety matters on Boeing airplanes in 2019, the firm has improved quality assurance at its facilities and the Boeing 737 MAX, which had been grounded after two crashes, has been allowed to fly again in many countries.
Boeing was founded in 1916 and is placed sixth on our list of 10 best travel stocks to buy right now. The easing of COVID-19 restrictions and the reopening of airports globally will benefit the aircraft manufacturer. On April 18, a Dubai leasing firm ordered 15 MAX planes as travel by air increased following the vaccine rollout in the United Arab Emirates.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in the firm with more than 8 million shares worth more than $1.7 billion.
5. The Walt Disney Company (NYSE: DIS)
Number of Hedge Fund Holders: 144
The Walt Disney Company (NYSE: DIS) is a California-based entertainment firm. Disney operates many theme parks and hotels but also has stakes in the mass media, consumer product and cruise line businesses. The company was founded in 1923 and is placed fifth on our list of 10 travel stocks to buy right now as COVID-19 restrictions ease and public places reopen following a difficult 2020. Disney has a market cap of more than $341 billion and posted more than $65 billion in revenue in October 2020.
On April 21, Disney announced that it had signed a deal with Sony Pictures to bring the Marvel film series on Disney streaming platforms. Media reports indicate that the deal is worth hundreds of millions of dollars but the official price has not been disclosed yet. On April 16, investment bank UBS forecast growing earnings for Disney’s theme parks and streaming services, and rated the company stock Buy with a price target of $215.
At the end of the fourth quarter of 2020, 144 hedge funds in the database of Insider Monkey held stakes worth $16 billion in the firm, up from 112 in the preceding quarter worth $8 billion.
Harding Loevner, in their Q4 2020 investor letter, mentioned Walt Disney (NYSE: DIS). Here is what Harding Loevner has to say about Walt Disney in their Q4 2020 investor letter:
“One of the original constituents of the Nifty Fifty holds a place in our portfolio today. When we bought Disney three years ago, we wrote that “we view Disney theme parks in the US, Europe, and China as resistant to online substitution.” We did not reckon on a pandemic, which closed all of them, and sent all of usto our couches. Disney, however, wasready for us, brilliantly illustrating the importance of management foresight and change management. Or, as Louis Pasteur said, “chance favors the prepared mind.”
A century after its founding in 1923, Disney is in the middle of a bold shift from its legacy media networks & entertainment model—with cable TV, theme parks, and theater films dominating its earnings—to a direct-to-consumer streaming media model. The keys to Disney’s transition: matchless storytelling, coupled with financial strength. The company reliably creates content that people all over the world are eager to consume. It also hastened spending on original content to attract subscribers to its new streaming platform. These factors have allowed Disney to weather the pandemic having expanded its direct engagement with customers. Such connections yield a rich harvest of insights used to customize offerings on a mass scale, reinforcing that engagement in a virtuous circle and thereby raising the lifetime value of each customer. Subscribers to Disney+ reached 86.8 million one year after launch, compared to the 60 – 90 million management projected to reach in 2024. To be sure, Netflix, Apple, and Amazon remain formidable competitors in new-era streaming entertainment (mind what we said about everyone standing up at once), but there’s fight left in this old dog.”
4. Expedia Group, Inc. (NASDAQ: EXPE)
Number of Hedge Fund Holders: 76
Expedia Group, Inc. (NASDAQ: EXPE) is a Seattle-based digital travel firm. The brands it owns and operates include Expedia.com, Vrbo, Hotels.com, Hotwire.com, Orbitz, Travelocity, trivago and CarRentals.com. Expedia has a market cap of more than $25 billion and posted $5 billion in annual revenue in December 2020, down more than 50% from the $12 billion reported the year before. Even though COVID-19 hit the company hard, it is expected to make a strong recovery as a travel boom is expected after pandemic restrictions ease.
Expedia was founded in 1996 and is placed fourth on our list of 10 best travel stocks to buy right now. Seeing the signs of the economic recovery, investment bank Morgan Stanley on March 25 increased its price target on Expedia stock to $200 from $160, maintaining an Equal Weight rating on the company stock.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm D1 Capital Partners is a leading shareholder in the firm with 12 million shares worth more than $1.6 billion.
3. Avis Budget Group, Inc. (NASDAQ: CAR)
Number of Hedge Fund Holders: 28
Avis Budget Group, Inc. (NASDAQ: CAR) is a New Jersey-based company involved in the car rental and sharing business. It manages many car-related brands, including Avis Car Rental, Budget Car Rental, Budget Truck Rental, Zipcar, Payless Car Rental, Apex Car Rentals, Maggiore Group, and France Cars. The firm also provides insurance services for customers for protection against accidents. Avis was founded in 1946 and operates in more than 10,000 locations globally.
On March 16, investment bank Morgan Stanley downgraded the rating of Avis stock to Equal Weight from Outperform and revised the price target to $67. Although the shares of Avis fell 2.3% after the ratings update, they have since gained on the back of positive gains from the emerging post-pandemic situation in the United States.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm SRS Investment Management is a leading shareholder in the firm with 18.4 million shares worth more than $687 million.
2. Marriott International, Inc. (NASDAQ: MAR)
Number of Hedge Fund Holders: 58
Marriott International, Inc. (NASDAQ: MAR) is a Maryland-based hotel company. The properties that the firm runs include JW Marriott, The Ritz-Carlton, Ritz-Carlton Reserve, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari, Marriott Hotels, Sheraton, Delta Hotels, and Marriott Executive Apartments, among several others around the world. It has more than 7,000 operations under its control in more than 130 countries. It was founded in 1927 and is ranked second on our list of 10 best travel stocks to buy right now.
Marriott has a market cap of over $47 billion and posted an annual revenue of close to $2.2 billion in December 2020, down from more than $5 billion reported the year before. On February 22, investment bank Morgan Stanley improved the price target on Marriott stock to $123 from $120 as lockdown restrictions eased and the firm reported an increase in bookings at its establishments globally. The company operates one of the largest luxury hotel chains in the world and will stand to benefit from increased travel after the lockdown is lifted.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eagle Capital Management is a leading shareholder in the firm with 12.4 million shares worth more than $1.6 billion.
1. Booking Holdings Inc. (NASDAQ: BKNG)
Number of Hedge Fund Holders: 108
Booking Holdings Inc. (NASDAQ: BKNG) is a Connecticut-based travel technology firm. The company owns and runs Booking.com that provides online reservation services to many travel destinations, hotels, and restaurants around the world. The firm also runs Rentalcars.com, Priceline, Agoda, KAYAK, and OpenTable, all products that compliment its travel business. The firm was founded in 1997 and is placed first on our list of 10 best travel stocks to buy right now.
On April 13, investment bank Jefferies echoed market sentiment by upgrading the rating of Booking stock to Buy from Hold and increased the price target to $2800 from $2300. The bank said that Booking could witness strong growth in 2021 as increased travel would lift the revenues for the firm after a dismal 2020.
At the end of the fourth quarter of 2020, 108 hedge funds in the database of Insider Monkey held stakes worth $8.2 billion in the firm, down from 113 in the previous quarter having shares worth $6.6 billion.
RiverPark Large Growth Fund, in their Q1 2021 investor letter, mentioned Booking Holdings Inc. (NASDAQ: BKNG). Here is what RiverPark Large Growth Fund has to say about Booking Holdings Inc. in their Q1 2021 investor letter:
“We bought back a position in Booking Holdings during the quarter. Booking is the world’s leader in online travel, operating in 200 countries with brands including Booking.com, priceline.com, agoda.com, Kayak, Rentalcars.com and OpenTable. The company has been a dominant on-line travel agency for more than a decade with a high margin business model (40% EBITDA margin for 2019) that requires limited capital expenditures, typically less than 3% of revenue, producing $4.5 billion free cash flow for 2019. This cash flow has been used for episodic acquisitions as well as to return cash to shareholders.
BKNG is well positioned in travel as the largest player in online lodging bookings and the second largest player in alternative accommodations. Like all travel companies, Booking was hit hard by the pandemic, but with its high international exposure, we expect the company’s recovery to be equally strong when travel returns.”
You can also take a peek at 10 Best Biotech Stocks To Buy For 2021, and Top 10 Best Freelancing Platforms and Websites for 2021.
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Disclosure: None. 10 Travel Stocks to Buy Right Now is originally published on Insider Monkey.
