In this article, we discuss 11 best travel stocks to buy right now.
The Travel & Tourism Economic Impact report for 2022 by the London-based World Travel & Tourism Council indicated that tourism revenue in 2020 declined about 59% in the Asia-Pacific as compared to 2019 levels, which was the highest global drop. Recovery initiatives in the region were dull in 2021, as most countries maintained tight border restrictions. However, the report by World Travel & Tourism Council demonstrates that the Asia-Pacific is forecasted to bridge the gap this year, and travel revenue contribution to the economy will increase by nearly 71%. Travel restrictions were first lifted in India and Australia, followed by Malaysia, Thailand, and other Southeast Asian countries. Later, Japan, South Korea, and Taiwan also opened up.
The report suggests ongoing gains to Asia-Pacific’s travel sector in 2023, and the year after that is also expected to bring positive growth in the industry. By 2025, travel revenue will provide 32% more to the Asian GDP than it did pre-pandemic.
As per a Bloomberg report dated December 13, China’s swift reopening and easing of Covid Zero policies has initiated a solid rebound in the world’s largest domestic air travel market, which is a positive catalyst for the ‘Big Three’ Chinese airlines, which have suffered billions of dollars in losses since the beginning of the pandemic. Despite a slowing global economy, pent up travel and leisure demand makes it a good idea to pick up some of the best travel stocks like The Walt Disney Company (NYSE:DIS), MGM Resorts International (NYSE:MGM), and Las Vegas Sands Corp. (NYSE:LVS).
Our Methodology
We selected the following travel stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
Photo by Artur Voznenko on Unsplash
Best Travel Stocks To Buy Right Now
11. Carnival Corporation & plc (NYSE:CUK)
Number of Hedge Fund Holders: 14
Carnival Corporation & plc (NYSE:CUK) is a Florida-based leisure travel company that operates ships which visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK), and Cunard brands.
On November 16, Carnival Corporation & plc (NYSE:CUK) announced a private offering of $1 billion aggregate principal amount of its 5.75% convertible senior notes due 2027 as part of the company’s 2024 refinancing plan with potential cash redemption feature. The notes will pay interest bi-annually on June 1 and December 1 of each year, beginning on June 1, 2023, at a rate of 5.75% per year. The convertible notes will mature on December 1, 2027.
Investment advisory UBS on November 14 raised the firm’s price target on Carnival Corporation & plc (NYSE:CUK) to 1,219 GBp from 588 GBp and kept a Buy rating on the shares. Analyst Robin Farley issued the ratings update.
According to Insider Monkey’s Q3 data, 14 hedge funds were bullish on Carnival Corporation & plc (NYSE:CUK), with collective stakes worth $116.2 million, compared to 13 funds in the prior quarter worth $100.8 million. Robert Henry Lynch’s Aristeia Capital is the biggest position holder in the company, with 11.2 million shares worth nearly $70 million.
Like The Walt Disney Company, MGM Resorts International, and Las Vegas Sands Corp., Carnival Corporation & plc (NYSE:CUK) is one of the best travel stocks to invest in.
10. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 23
Wynn Resorts, Limited (NASDAQ:WYNN) was founded in 2002 and is based in Las Vegas, Nevada. The company designs, develops, and operates integrated resorts, offering private gaming salons, casinos, luxury hotel towers, health clubs, spas, salons, and pools. Wynn Resorts, Limited is one of the best travel stocks to invest in. On December 16, the company announced that Wynn Resorts Macau has signed a 10-year agreement with the Macau government for the renewal of its gaming concession.
On December 7, Stifel analyst Steven Wieczynski raised the price target on Wynn Resorts, Limited to $109 from $85 and maintained a Buy rating on the shares, citing his belief that Wynn Resorts, Limited “represents one of the most compelling ideas under our coverage given the massive underperformance over the last 24 months coupled with benign investor expectations.” He believes Macau-centric stocks such as Wynn Resorts, Limited could present investors with “an interesting way to play the China reopening story” heading into 2023.
According to Insider Monkey’s data, 23 hedge funds were bullish on Wynn Resorts, Limited at the end of September 2022, compared to 26 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 662,502 shares worth $41.75 million.
In its Q3 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Wynn Resorts, Limited was one of them. Here is what the fund said:
“In the most recent quarter, we exited the Fund’s holdings in Wynn Resorts, Limited due to: (i) ongoing COVID-19-related travel restrictions in China, Macau, and Singapore; and (ii) the Macau government’s announcement to tighten its casino regulatory oversight.”
9. Travel + Leisure Co. (NYSE:TNL)
Number of Hedge Fund Holders: 35
Travel + Leisure Co. (NYSE:TNL) is a Florida-based provider of hospitality services and products in the United States and internationally. The company operates in two segments – Vacation Ownership, and Travel and Membership. It is one of the best travel stocks to buy. On November 16, Travel + Leisure Co. declared a $0.40 per share quarterly dividend, in line with previous. The dividend is payable on December 30, to shareholders of the company as of December 15. The dividend yield on December 21 came in at 4.49%.
On December 14, Truist analyst C. Patrick Scholes maintained a Buy recommendation on Travel + Leisure Co. but lowered the price target on the shares to $60 from $72 as part of a broader research note on vacation ownership names.
According to Insider Monkey’s third quarter database, Travel + Leisure Co. was part of 35 hedge fund portfolios, compared to 31 funds in the prior quarter. The collective stakes in Q3 2022 amounted to $423.5 million, up from $408 million in Q2.
Here is what Baron Real Estate Fund has to say about Travel + Leisure Co. in its Q1 2022 investor letter:
“Following strong quarterly business results, the shares of Travel + Leisure Co. (TNL), a leading timeshare and hospitality company, performed well in the most recent quarter. We participated in the company’s investor day in September 2021 and remain encouraged by management’s four-year growth plan, which includes expectations to grow earnings at a compound annual growth rate of 17% to 22%. Management also expects to generate approximately $3 billion of cumulative cash flow in the next four years that can be used for dividends, share repurchases, strategic mergers and acquisitions, and reinvesting in the business. We believe the shares are attractively valued at only 12.5 times estimated 2022 earnings per share and offer compelling prospects for strong shareholder returns over the next few years.”
8. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 37
United Airlines Holdings, Inc. (NASDAQ:UAL) was incorporated in 1968 and is headquartered in Chicago, Illinois. The company provides air transportation services in North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America. United Airlines Holdings, Inc. transports passengers and cargo through its mainline and regional fleets. It is one of the premier travel stocks to invest in. On December 13, the company announced an agreement to buy up to 200 787 Dreamliners while outlining its capital expenditure goals. United Airlines Holdings, Inc. expects delivery of the new planes between 2024 and 2032.
On December 16, Goldman Sachs analyst Catherine O’Brien initiated coverage of United Airlines Holdings, Inc. with a Buy rating and a $51 price target. While optimistic about the backdrop for airlines, the analyst noted that the economic outlook is uncertain. In this environment, she favors stocks with “idiosyncratic earnings drivers, relatively more recovery tailwinds remaining, or characteristics that reduce downside risk.” She is positive on United Airlines Holdings, Inc. given its exposure to end markets that are still rebounding and its growth plans “that are boosted by reactivation of the 777 fleet.”
According to Insider Monkey’s data, 37 hedge funds were bullish on United Airlines Holdings, Inc. at the end of the third quarter of 2022, compared to 35 funds in the last quarter. Israel Englander’s Millennium Management is the biggest stakeholder of the company, with approximately 4 million shares worth $126.6 million.
7. Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH)
Number of Hedge Fund Holders: 38
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is based in Miami, Florida, and the company operates the Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises in North America, Europe, the Asia-Pacific, and internationally. On December 9, Norwegian Cruise Line Holdings Ltd. announced that it extended the maturities of nearly $1.4 billion of its operating credit facility by one year to January 2025. The company is actively looking at alternatives to deal with the remaining debt associated with the operating credit facility that will mature in January 2024.
On December 15, after Norwegian Cruise Line Holdings Ltd. announced that they were letting go about 9% of their shore side employee base and making executive leadership changes at two of their brands, Stifel analyst Steven Wieczynski said he has received “numerous questions from investors” about this news and its potential impact. The analyst, who believes that when Norwegian Cruise Line Holdings Ltd. offers “real” cost guidance in early 2023 it will be “better than what’s embedded in investors’ minds right now,” kept a Buy rating and a $26 price target on the shares.
According to Insider Monkey’s data, 38 hedge funds were bullish on Norwegian Cruise Line Holdings Ltd. at the end of the third quarter of 2022, compared to 28 funds in the earlier quarter. John W. Rogers’ Ariel Investments is the largest position holder in the company, with 7.13 million shares worth $81 million.
Ariel Investment made the following comment about Norwegian Cruise Line Holdings Ltd. in its Q3 2022 investor letter:
“Cruise ship operator Norwegian Cruise Line Holdings Ltd. also aided relative performance in the period. Onboard spending has been stronger than management expectations and forward booking commentary remains encouraging with both trends and pricing for 2023 ahead of pre-pandemic levels. Though questions persist around the macro backdrop, NCLH has an experienced executive management team at its helm, a young average fleet and solid liquidity position. Over the long-term, we believe the current headwinds travel and leisure are experiencing will soften and expect NCLH’s fundamentals will prove resilient in the face of adversity. At today’s valuation, NCLH is currently trading at a -70% discount to our estimate of private market value.”
6. Trip.com Group Limited (NASDAQ:TCOM)
Number of Hedge Fund Holders: 42
Trip.com Group Limited (NASDAQ:TCOM) is a Shanghai-based travel service provider that offers accommodation reservation, transportation ticketing, packaged tours, corporate travel management, and other travel-related services in China and internationally. On December 14, Trip.com Group Limited reported a Q3 non-GAAP EPS of $0.22 and a revenue of $968 million, outperforming Wall Street estimates by $0.04 and $58.05 million, respectively.
On December 16, UBS analyst Wei Xiong upgraded Trip.com Group Limited to Buy from Neutral with a price target of $41, up from $28. The recent easing of COVID policies in China, a potentially faster-than-anticipated outbound travel recovery, and ongoing momentum in international markets offers better visibility on improving fundamentals, said the analyst, who lifted 2023 and 2024 revenue and earnings estimates for Trip.com Group Limited.
Among the hedge funds tracked by Insider Monkey, Richard S. Pzena’s Pzena Investment Management is the leading position holder in Trip.com Group Limited as of September 2022, with more than 10 million shares worth $278 million.
In addition to The Walt Disney Company, MGM Resorts International, and Las Vegas Sands Corp., Trip.com Group Limited is one of the premier travel stocks to invest in.
Harding Loevner made the following comment about Trip.com Group Limited in its Q3 2022 investor letter:
“Our other new Chinese holding is a familiar one: Trip.com Group Limited , which we’ve previously held, is responsible for half of China’s online travel bookings. Among its more than 50,000 travel partners are many upscale hotels, and this abundance of choice continues to attract a vast user base. Trip.com’s international footprint has broadened through its subsidiary Skyscanner, a UK platform, and a partnership with TripAdvisor of the US. The company’s leadership has experience successfully guiding the business through highly competitive conditions. Increasing travel demand in a post-COVID-19 world opens the door to accelerated growth.”
5. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 42
Royal Caribbean Cruises Ltd. (NYSE:RCL) is a Florida-based company that operates cruises under the Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises brands, which cover approximately 1,000 destinations. Royal Caribbean Cruises Ltd. is one of the best travel stocks to consider. On December 19, the company announced a partnership with fund iCON Infrastructure Partners VI to develop strategic cruise port infrastructure. The proposed partnership will own, develop, and manage cruise terminal facilities and infrastructure in home ports and key ports of call, with Royal Caribbean Cruises Ltd. holding a 10% ownership stake.
On December 15, Barclays analyst Brandt Montour raised the firm’s price target on Royal Caribbean Cruises Ltd. to $70 from $66 and kept an Overweight rating on the shares.
According to Insider Monkey’s third quarter database, 42 hedge funds reported owning stakes worth $491.3 million in Royal Caribbean Cruises Ltd., compared to 28 funds in the prior quarter worth $333 million. John W. Rogers’ Ariel Investments is a prominent investor in the company.
Ariel Investment made the following comment about Royal Caribbean Cruises Ltd. in its Q3 2022 investor letter:
“Global cruise vacation company Royal Caribbean Cruises Ltd. also aided relative performance in the quarter. With the entire fleet returning to service in June, RCL delivered positive EBITDA and operating cash flow for the first time since the pandemic began. Forward booking commentary is also encouraging with both trends and pricing for 2023 ahead of 2019 levels. Though questions persist around the macro backdrop, RCL has an experienced executive management team with operational expertise at its helm, as well as a healthy liquidity position. Over the long term, we believe the headwinds travel and leisure are experiencing will soften and expect RCL’s fundamentals will prove resilient in the face of adversity. At today’s valuation, RCL is currently trading at a nearly -60% discount to our estimate of private market value.”
4. Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders: 48
Las Vegas Sands Corp. is a Nevada-based company that develops, owns, and operates integrated resorts in Asia and the United States. It owns and manages The Venetian Macao Resort Hotel, the Londoner Macao, The Parisian Macao, The Plaza Macao, Four Seasons Hotel Macao, Cotai Strip, the Sands Macao in Macau, and Marina Bay Sands in Singapore. On December 19, Las Vegas Sands Corp. highlighted its vision for the company’s next ten years in Macau after officially inking a new 10-year gaming concession. The company also plans to invest in non-gaming entertainment.
On December 15, investment advisory Barclays raised the firm’s price target on Las Vegas Sands Corp. to $57 from $43 and reiterated an Overweight rating on the shares. Analyst Brandt Montour issued the ratings update.
According to Insider Monkey’s data, 48 hedge funds were bullish on Las Vegas Sands Corp. at the end of Q3 2022, compared to 42 funds in the last quarter. Robert Pitts’ Steadfast Capital Management is a prominent stakeholder of the company, with 2.5 million shares worth $94.7 million.
3. MGM Resorts International (NYSE:MGM)
Number of Hedge Fund Holders: 53
MGM Resorts International is a Nevada-based company that owns and operates casino, hotel, and entertainment resorts in the United States and Macau. The company operates through three segments – Las Vegas Strip Resorts, Regional Operations, and MGM China. MGM Resorts International is one of the best travel stocks to monitor.
On December 19, MGM Resorts International announced that MGM Grand Paradise has been awarded a new 10-year gaming concession contract. As part of the agreement, MGM China will invest approximately $2 billion over the next decade, nearly 50% of which is expected to be treated as capital expenditure and 50% as operating expense. About 90% of this budget will be spent on the development of international tourist markets, non-gaming projects, and programming to increase diversification in the region.
Truist analyst Barry Jonas on December 5 upgraded MGM Resorts International to Buy from Hold with a price target of $50, up from $40. The analyst said that he had historically been more cautious with bear-case macro risks related to the Strip and destination markets, but he also forecasts relative outperformance in 2023 on the back of the Strip’s solid event calendar and returning midweek business travel.
According to Insider Monkey’s data, 53 hedge funds were bullish on MGM Resorts International at the end of September 2022, compared to 46 funds in the last quarter. Keith Meister’s Corvex Capital is the biggest stakeholder of the company, with 6.6 million shares worth $198.3 million.
Baron Funds made the following comment about MGM Resorts International in its Q3 2022 investor letter:
“MGM Resorts International is a leading global casino and entertainment company with 29 unique hotels and casinos including some of the most recognizable resort brands such as Bellagio, MGM Grand, ARIA, and Park MGM. At its recent price of only $30 per share, we believe MGM’s valuation is compelling at only 6 times 2023 estimated cash flow.”
2. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 53
Delta Air Lines, Inc. (NYSE:DAL) is a Georgia-based company that provides air transportation for passengers and cargo in the United States and internationally. The company operates through two segments, Airline and Refinery. It is one of the leading travel stocks to consider. Delta Air Lines, Inc. expects passenger levels to increase approximately 5% to 9% in Q4 2022 as compared to the same period in 2019.
On December 20, Citi analyst Stephen Trent raised the price target on Delta Air Lines, Inc. to $59 from $55 and kept a Buy rating on the shares. Delta Air Lines, Inc.’s combination of international route exposure, seat mile cost dilution, and relatively stable fuel prices should support the shares over the next year, the analyst wrote in a research note. The analyst continues to see Delta Air Lines, Inc. as his favorite U.S. carrier.
According to Insider Monkey’s data, Delta Air Lines, Inc. was part of 53 public stock portfolios at the end of Q3 2022, compared to 49 in the prior quarter. Jim Simons’ Renaissance Technologies held the largest stake in the company, comprising 8.8 million shares worth $247.3 million.
Here is what Miller Value Partners specifically said about Delta Air Lines, Inc. in its Q3 2022 investor letter:
“Delta Air Lines, Inc. ($29.42) is a high-quality airline (yes, there really is such a thing!). It didn’t issue any equity in the pandemic. It focuses on delivering a superb customer experience and has brand loyalty (including a stable revenue stream from partner American Express, growing at 20%/ year). Maybe the best evidence: it’s managed to outperform the S&P 500 over the past decade despite a horrible pandemic ending point (+13.2% vs. 11.7%1 ). It trades for 4x 2024 earnings! If it eventually trades at Southwest’s historical valuation, it implies this stock should double as well.”
1. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 112
The Walt Disney Company is one of the best travel stocks to invest in. The company offers Disney Parks and Experiences worldwide, in addition to distributing media and entertainment content. Morgan Stanley analyst Benjamin Swinburne on December 12 maintained an Overweight rating on The Walt Disney Company but lowered the firm’s price target on the shares to $115 from $125. He trimmed his estimates to reflect updated FY23 guidance, which he views as “achievable even with current macro environment and linear pressures.” The return of Bob Iger as CEO offers the opportunity to reorganize Disney’s Media businesses to prioritize driving overall consolidated earnings growth, added the analyst.
According to Insider Monkey’s data, 112 hedge funds were bullish on The Walt Disney Company at the end of the third quarter of 2022, compared to 109 funds in the last quarter. Ken Fisher’s Fisher Asset Management is a prominent stakeholder of the company, with 5.14 million shares worth $485 million.
Here is what Third Point specifically said about The Walt Disney Company in its Q3 2022 investor letter:
“As disclosed in our Q2 letter, we reinitiated a significant position in The Walt Disney Company when the company retested its Covid lows earlier this year. At the current price, Disney is trading for little more than the stand-alone value of its Parks business and a mere 15x ’24 “street” consensus. The company remains early in its Direct to Consumer (“DTC”) transition with a leading market position, and yet the current stock price ascribes negligible value to the streaming business. We believe this is due to questions around the terminal economics of streaming, given large losses being generated today at Disney (>$1 billion dollars last quarter) and stagnating margins at peers such as Netflix. On the last earnings call, management highlighted three items that could lead to an inflection in DTC profitability over the next 12 months: a 38% price increase for Disney+ in the US; moderating growth in cash content expense; and an advertising tier for Disney+ launching in two months that can drive additional ARPU given high demand for the Disney brand amongst advertisers.
While the company has guided Disney+ achieving breakeven sometime within the fiscal year ending September 2024, the valuation suggests the market remains skeptical. Disney only trades at ~14x the $7 in earnings generated prior to the Fox acquisition, which implies investors don’t expect earnings to meaningfully exceed this figure in the coming years. Hence, the first value driver we highlighted in our last letter is the opportunity for management to optimize Disney’s cost base to drive earnings growth. We believe Disney has ample means to rationalize costs across its operating platform and deliver targeted content for home viewing that does not entail the same cost structure of exclusive theatrical releases…” (Click here to view the full text)
You can also take a look at 15 Best Affordable Stocks To Buy Now and Bill Gates Net Worth, Investments and Holdings.
Suggested articles:
This article is originally published at Insider Monkey.
Hedge Fund Resource Center