In this article, we discuss the 12 best travel stocks to buy right now. To skip the detailed analysis of the travel and tourism industry, go directly to the 5 Best Travel Stocks To Buy Right Now.
The travel and tourism sector was hit the hardest by the COVID-19 pandemic and is still recovering from its aftermath. Nevertheless, United Nations World Tourism Organization (UNWTO) data shows that the global travel sector has reached 80% of pre-pandemic levels. The pandemic resulted in 62 million layoffs, yet the industry’s job creation is growing 23% on an annual basis.
Present Conditions of the Industry
Revenge travel has been one of the major factors of the rebound in the travel industry. People are compensating for the time and opportunities they lost during the COVID-19 pandemic. Furthermore, the ease of lockdown and travel restrictions in China also had a significant impact and the country is responsible for 11% of the annual online travel market growth.
Chinese online travel agency Trip.com Group Limited (NASDAQ:TCOM)’s net income saw a 180% year-over-year (YoY) increase and a 22% sequential increase in its second quarter. Its second-quarter results also put the airline and hospitality industry in a positive light as outbound hotel and air reservations recovered 60% to the pre-pandemic levels. The air ticket bookings on Trip.com Group Limited (NASDAQ:TCOM)’s Online Travel Agents platform almost doubled to the pre-pandemic levels and were up 120% YoY.
HSBC analyst Meredith Jansen showed a bullish sentiment toward the travel and leisure industry on October 23 when companies like MGM Resorts (NYSE:MGM), Wynn Resorts (NASDAQ:WYNN), and Airbnb (NASDAQ:ABNB) were S&P 500’s biggest gainers of the day. The analyst initiated coverage of nine travel and leisure stocks with a Buy rating and wrote:
“We are bullish on new demand categories and the innovative technologies that can further enhance travel and leisure.”
Innovations and technology improvements in the travel segment have proven to be beneficial for the industry in the past and will continue to do so. At its second-quarter earnings call, Expedia Group, Inc. (NASDAQ:EXPE)’s Vice Chairman and Chief Executive Officer, Peter Kern, discussed the introduction of AI to the Expedia platform. He said:
“On the topic of AI, earlier this year, we launched conversational trip planning, powered by ChatGPT and the Expedia iOS app. And last month, we launched it on the Expedia Android app. We have been learning from consumer interactions and are adding a number of new features to help consumers on their journey of discovery. Travelers can now start a new conversation by choosing from suggested prompts, and soon they will be able to return to a conversation at any time and even respond throughout a conversation by simply choosing a suggested response, all of which is designed to bring them one step closer to booking their desired trip.”
Travel Industry Outlook
The airline industry was the most impacted segment of the travel sector due to the pandemic. In 2020, the travel industry reported $230 billion in losses while the airline industry accounted for $167 billion of it. According to the International Air Transport Association (IATA), the airline industry’s profitability is expected to reach $9.8 billion by the end of the year, compared to the previous forecast of $4.7 billion. On top of that, the industry revenues are expected to be almost 10% up from 2022 levels while still lagging about 4% from the 2019 levels.
The cruise industry is one of the fastest growing segments of the industry. According to the Cruise Lines International Association (CLIA) outlook, the passenger volume for cruise lines in 2023 is expected to be over 100% of the 2019 levels with 31.5 million passengers. Moreover, by 2027, CLIA predicts that the passenger volume will reach nearly 40 million.
The hospitality industry has performed well in the recent quarters. However, STR and Tourism Economics have lowered the growth expectations for the U.S. hotel industry. The revenue per available room growth forecast was lowered by 0.5% to 4.5% for 2023 and 4.1% for 2024. In 2022, the revenue per available room grew by 30.6% and the occupancy rate grew by 8.9%. In 2023 and 2024, the occupancy is expected to grow by 0.8% and 1%, respectively. Finally, the average daily rate increased by 20% in 2022, while in 2023 and 2024, it is expected to grow by 3.6% and 3%, respectively.
In times of growing travel demand, some of the best travel stocks that investors should keep an eye out for include Booking Holdings Inc. (NASDAQ:BKNG), Expedia Group, Inc. (NASDAQ:EXPE), and Delta Air Lines, Inc. (NYSE:DAL).
Our Methodology
For this article we scanned Insider Monkey’s database of 910 hedge funds and picked 12 travel stocks with the highest number of hedge fund investors.
Best Travel Stocks To Buy Right Now
12. Ryanair Holdings plc (NASDAQ:RYAAY)
Number of Hedge Fund Holders: 21
Ryanair Holdings plc (NASDAQ:RYAAY) is an Irish company that provides airline services. The company recovered faster than most airlines after the COVID-19 disastors. It is planning to increase its fleet by 300 planes by 2033. Ryanair Holdings plc (NASDAQ:RYAAY) is buying the airplanes from The Boeing Company (NYSE:BA). According to the company’s owner, the planes are being bought at a “significant discount.”
Ryanair Holdings plc (NASDAQ:RYAAY)’s stock was held by 21 hedge funds in the second quarter of 2023, up from 17 in Q1. Harris Associates owned over 7.44 million of the company shares, valued at $822.919 million and was the company’s largest investor.
According to Ryanair Holdings plc (NASDAQ:RYAAY)’s FY 2024 outlook, the company expects traffic to grow to nearly 183.5 million which is almost 125% of pre-COVID levels. The company’s FY 24 will end in march 2024.
Ryanair Holdings plc (NASDAQ:RYAAY) is one of the best travel stocks along with Booking Holdings Inc. (NASDAQ:BKNG), Expedia Group, Inc. (NASDAQ:EXPE), and Delta Air Lines, Inc. (NYSE:DAL).
11. Tripadvisor, Inc. (NASDAQ:TRIP)
Number of Hedge Fund Holders: 33
Tripadvisor, Inc. (NASDAQ:TRIP) is a Massachusetts-based travel research corporation that is accessible in 43 markets. The company manages various travel businesses through apps and websites.
On October 17, Goldman Sachs started coverage of Tripadvisor, Inc. (NASDAQ:TRIP) stock with a price target of $22 and a Buy rating. Among the reasons for being bullish on the stock, analyst Ben Miller talked about Viator and TheFor becoming profitable in the future and the improvement of GAAP EPS through increased cash flow.
Out of the 910 elite hedge funds tracked by Insider Monkey, 33 hedge funds held a stake in Tripadvisor, Inc. (NASDAQ:TRIP) in Q2, compared to 25 in the prior quarter. Boston-based PAR Capital Management was the biggest shareholder in the company with 5.4 million shares worth $89.046 million.
10. Travel + Leisure Co. (NYSE:TNL)
Number of Hedge Fund Holders: 33
Travel + Leisure Co. (NYSE:TNL), previously known as Wyndham Destinations, Inc., is focused on providing hospitality products and services, including selling vacation ownership interests and consumer financing for them, vacation exchange brands, travel tech brands, and more.
In Q2, hedge fund sentiment was positive toward Travel + Leisure Co. (NYSE:TNL). According to the Insider Monkey database, the number of hedge fund investors in the company increased to 33 in Q2 from 31 in Q1.
On September 20, Travel + Leisure Co. (NYSE:TNL) took a step toward its long-term growth and announced that it bought rights to a timeshare business of Sports Hospitality Ventures, LLC. The company expects gradual growth beginning in H2 of 2025 and will be engaged in the sale and marketing of the new Sports Illustrated vacation club and a few other properties.
On October 25, Travel + Leisure Co. (NYSE:TNL) released its Q3 earnings result in which it surpassed analysts’ estimates for both EPS and revenue. Its non-GAAP EPS of $1.54 and revenue of $986 million exceeded the estimates by $0.08 and $14.34 million, respectively.
9. Copa Holdings, S.A. (NYSE:CPA)
Number of Hedge Fund Holders: 34
Copa Holdings, S.A. (NYSE:CPA) is the parent company of Copa Airlines and its subsidiaries. It is headquartered in Panama City, Panama.
Over the last three months, Tipranks reports that Copa Holdings, S.A. (NYSE:CPA) has been covered by 5 Wall Street analysts and all of them maintain a Buy rating on the company’s stock. Their average price target of $145.40 represents almost an 84% upside to Copa Holdings, S.A. (NYSE:CPA)’s stock price of $79.07 at the time of the October 27 market close.
In the second quarter, Copa Holdings, S.A. (NYSE:CPA)’s stock was owned by 34 hedge funds at a combined stake value of $519.9 million.
8. Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH)
Number of Hedge Fund Holders: 35
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is one of the largest cruise operators in the world. The company operates through three subsidiaries; Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises.
In the second quarter, 35 out of 910 elite hedge funds tracked by Insider Monkey had a stake in Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) at a combined value of $690 million. In the previous quarter, 29 hedge funds had a stake worth $355.319 million in the company. Ariel Investments has been the biggest hedge fund holder of Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) for four quarters in a row. In Q2, the firm owned 6.6 million company shares worth over $144 million.
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) was hit hard during the COVID-19 pandemic. However, the management is still confident in its operations. Unlike other cruise lines, the company did not offer discounted prices and is expecting to increase its fleet by 8 ships between 2023 and 2028. The company is expected to reach positive net income by the end of the year which is why it is among the best travel stocks to buy now. As of October 26, Wells Fargo kept an Overweight rating on Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) shares with a $19 price target.
Ariel Small Cap Value Strategy made the following comment about Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) in its Q2 2023 investor letter:
“Several stocks in the portfolio had strong returns over the period. Cruise ship operator, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH), delivered the second highest total return in the S&P 500 during the quarter. Robust consumer demand for travel experiences drove a top- and bottom-line earnings beat. The strong WAVE season is also translating to solid forward booking trends inclusive of increased occupancy capacity at higher pricing. Looking ahead, NCLH remains focused on right sizing its cost base and improving margins to strengthen its foundation for sustainable and profitable growth. Meanwhile, the company executed on its leadership succession plan, with 15-year veteran, Harry J. Sommer’s recent appointment to CEO. With an experienced management team at its helm, a young average fleet and solid liquidity position, we continue to believe the risk / reward remains sharply skewed to the upside.”
7. Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 40
Carnival Corporation & plc (NYSE:CCL) is a major cruise operator and has nine cruise lines under its belt, including but not limited to, Carnival Cruise Line, Seabourn, and Cunard. The company also has a joint venture with China State Shipbuilding Corporation (CSSC) known as CSSC Carnival Cruise Shipping Limited.
On September 29, Carnival Corporation & plc (NYSE:CCL) posted a Q3 non-GAAP EPS of $0.86 which beat the estimates by $0.13 and the revenue increased 58.9% YoY to $6.85 billion, surpassing the estimates by $160 million. The company’s Q4 outlook provided for its adjusted EBITDA stands between $800 million to $900 million, while for the full year, it is expecting an adjusted EBITDA of $4.1 billion to $4.2 billion.
Carnival Corporation & plc (NYSE:CCL) is considered an undervalued stock by Wall Street analysts as 10 out of 13 maintain a Buy rating on the company stock with an average price target of $18.27, compared to its stock price of $11.13 as of October 27.
Carnival Corporation & plc (NYSE:CCL) was mentioned in Aristotle Capital Management, LLC’s fourth quarter 2022 investor letter. Here is what it said:
“We first purchased shares of Carnival Corporation & plc (NYSE:CCL), the world’s largest cruise line, during the second quarter of 2019. At the time, we believed the company was improving in quality, as the industry (and shipyards) had consolidated to a point where returns on capital could increase systematically over time. In addition, cruising is underpenetrated when compared to land-based alternatives. Despite the difficulties faced by the cruise industry during the pandemic, in our opinion, consumer appetite for cruising remains high, with cumulative advanced bookings at the upper end of historical ranges. As discussed below, we believe Carnival’s peer Norwegian Cruise Line is more optimally positioned for the coming years.”
6. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 40
United Airlines Holdings, Inc. (NASDAQ:UAL), previously called United Continental Holdings, Inc., is a Chicago-based airline holding corporation. The company is one of the best travel stocks and its wholly-owned subsidiary, United, is one of the biggest U.S. carriers to China.
On October 3, United Airlines Holdings, Inc. (NASDAQ:UAL) declared that it placed an order with The Boeing Company (NYSE:BA) and Airbus (OTC:EADSY) for 110 new aircraft, including 50 787-9 airplanes and 60 A321neo narrowbody planes.
On October 17, United Airlines Holdings, Inc. (NASDAQ:UAL) posted a Q3 non-GAAP EPS of $3.65, surpassing the analysts’ estimates by $0.24. The revenue of $14.48 billion grew 12.4% YoY and topped the estimates by $70 million.
According to Insider Monkey’s database that tracks 910 elite hedge funds, 40 hedge funds had a stake in United Airlines Holdings, Inc. (NASDAQ:UAL) in Q2. The number of the company’s hedge fund investors remained the same in the first and second quarter of 2023, but the total investments by hedge funds increased from $695.486 million in Q1 to $995.564 million in Q2. Ken Griffin’s Citadel Investment Group increased its stake in the stock by a whopping 128% to 4.965 million shares worth $272.447 million.
Booking Holdings Inc. (NASDAQ:BKNG), Expedia Group, Inc. (NASDAQ:EXPE), and Delta Air Lines, Inc. (NYSE:DAL) are some of the best travel stocks to buy in addition to United Airlines Holdings, Inc. (NASDAQ:UAL).
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Disclosure. None. 12 Best Travel Stocks To Buy Right Now is originally published on Insider Monkey.
