12 Cheap Travel Stocks to Buy Now

In this article, we discuss 12 cheap travel stocks to buy now.

Revenge travel is the new phenomenon as travelers try to compensate for the lost time and opportunity over the last two years due COVID-19 restrictions. Opening of borders and easing of restrictions even in China is the catalyst behind the 11% annual online travel market growth rate. The segment has seen a spike in tourists searching and booking various travel services, including hotel and Airbnb accommodations, flights, cars, tours, and cruises.

Booking Holdings Inc. (NASDAQ:BKNG) is one of the companies benefiting from the surge in airline demand, with its stock up by about 40% year to date. Tripadvisor Inc. (NASDAQ:TRIP) and Expedia Group Inc. (NASDAQ:EXPE) are other stocks flying high as more people worldwide make travel arrangements to try and make up for the lost time following the Covid 19 pandemic. The companies are benefiting from a rebound in travel to urban centers, with some of the biggest cities in the world experiencing a significant uptick in tourists.

Solo trips were a thing at the height of the pandemic due to the need for minimal interaction to avert contracting or spreading the virus. Nevertheless, solo trips hurt the travel industry due to reduced revenues. Fast forward, there is a significant decrease in solo trips, with people opting to travel in large packs, which benefits most companies in the segment.

Even though most Americans are fearful that the economic situation will worsen and therefore cut back on expenditure, there was a 47% increase in people traveling in the U.S. compared to the second quarter of last year. Despite the cautious sentiment around finances, wary of the economic situation, people are still making travel arrangements and spending big in the process.

According to Calvin Li of JLL Hotels & Hospitality, sentiments in the travel industry have improved significantly.

“Everyone thought, Rates will decline. This is just a blip. Everyone’s traveling now, but it’s going to dissipate. That hasn’t happened. It hasn’t happened in Asia. It hasn’t happened in the U.S. or Europe. So, investors are a little bit more confident now that they have more data on their fingertips,” Li said in an interview with CNBC.

Experts are already predicting a booming travel demand in 2023, with 26% of Americans planning to increase their spending on leisure travel. Additionally, 53% of all Americans and 81% of leisure travelers have already made arrangements to travel over the next six months.

Technological advancement also significantly impacts the travel industry and is one of the catalysts behind robust growth. The thought of queueing for long hours in airports and losing luggage deterred many people from traveling. However, not anymore. Tech solutions like biometric identification are becoming common in airports, making it easy to check in and out.

 Techniques such as facial recognition and iris scans have enhanced airport screening, enabling after-passenger processing. For instance, the Dubai international airport has implemented biometric Smart Gate tunnels that allow travelers to verify their identity within seconds.

Pixabay/Public Domain

On the other hand, Chief financial officers and other executives in the hospitality and travel industry are prioritizing investments in I.T. to stay ahead of the curve and enhance customer experience. According to Li, there is also increased focus on ESG as stakeholders’ shareholders and guests demand owners to be held accountable to recap carbon-neutral targets.

While inflation levels are still high, travel costs have eased significantly with airline tickets down, thus helping attract most people into traveling. While the focus has always been on big players in the travel and tourism industry, little-known gems are poised to benefit from the expected travel boom.

With the interest rate cycles stabilizing and inflation abating in developed markets, expectations are high of increased investments as demand for risk grows. Now could be the best time to scan for cheap travel stocks to buy as high net-worth investors and corporates on the sidelines join the party.

Our Methodology 

For this article, we first used the Finviz stock screener to find the list of the cheap travel stocks to buy now. From a lengthy list of stocks, we filtered and focused on those with an Upside Potential of 10% or higher. Our analysis is also based on the hedge fund sentiment gathered from Insider Monkey’s database, which tracks 943 elite hedge funds as of the conclusion of the first quarter of 2023. The stocks were then ranked based on their upside potential.

12. Wynn Resorts, Limited (NASDAQ:WYNN)

Upside Potential: 14.79%

Price target: $124.27

Number of Hedge Fund Holders:46

Wynn Resorts, Limited (NASDAQ:WYNN) has been flying high, rallying by about 32% year to date even on facing a shaky economy, persistent inflation, and high-interest rates. Nevertheless, the company has continued to deliver impressive results from its core business of designing, developing, and operating integrated resorts. It’s one of the companies benefiting from a bounce back of the travel and tourism industry. Occupancy levels at its hotels and casino are above 80%. The company reinstating its dividend has also made it a Wall Street darling.

Likewise, analysts have a $124.27 price target on Wynn Resorts, Limited (NASDAQ:WYNN), implying a 14.79% upside potential from current levels. In the first quarter of 2023, 46 hedge funds had a stake in Wynn Resorts, Limited (NASDAQ:WYNN) compared to 36 in the previous quarter. In Q1, the company’s biggest hedge fund holder, Citadel Investment Group owned 1.12 million shares of the company worth $125.52 million.

Baron Funds made the following comment about Wynn Resorts, Limited (NASDAQ:WYNN) in its first quarter 2023 investor letter:

“In the first quarter of 2023, we re-acquired shares in Macau-centric casino gaming companies Wynn Resorts, Limited (NASDAQ:WYNN) and Las Vegas Sands Corporation with the following considerations in mind:

Since the early days of the COVID-19 pandemic in 2020 through mid-2022, the shares of Wynn and Las Vegas Sands significantly underperformed the share price performance of other U.S.-centric casino gaming and lodging companies due in large part to extremely limited travel mobility to Macau during China’s Zero-COVID policy. Just as business activity and the shares of U.S.-centric casino gaming companies rebounded sharply once people felt comfortable to travel to Las Vegas and other U.S. regional gaming markets, we have felt that Macau business activity and the shares of Macau-centric casino gaming companies would follow in the footsteps of Las Vegas-centric and other U.S. gaming and lodging companies and inflect positively once people were permitted to travel to Macau more freely.…” (Click here to read the full text)

11. MGM Resorts International (NYSE:MGM)

Upside Potential: 17.10%

Price target: $58.42

Number of Hedge Fund Holders:54

MGM Resorts International (NYSE:MGM) is another cheap travel stock to buy now, as it operates casino hotels and entertainment resorts in the U.S. and Macau. The company has been delivering impressive revenues from its Las Vegas properties amid increased consumer spending. Reopening the Macao strip in China has also strengthened the company’s prospects after remarkable results in recent years due to China’s lockdown. The company is also expanding its footprint into Japan with plans for an integrated resort.

With the company firing on all angles, analysts have a $58.42 price target on the stock, implying a 17.10% upside potential from current levels.

54 of the 943 hedge funds part of Insider Monkey’s research for this year’s first quarter had bought and owned MGM Resorts International (NYSE:MGM)’s shares. Out of these, the firm’s largest shareholder is Keith Meister’s Corvex Capital with investment more than $296 million.

Cove Street Capital  made the following comment about MGM Resorts International (NYSE:MGM) in its second quarter 2023 investor letter:

“As CEO Joey Levin pointed out in his Q1 quarterly letter, IAC traded at an enterprise value below its 18% stake in MGM Resorts International (NYSE:MGM) and 85% position in Angi (Ticker; ANGI)…meaning you effectively “get” 31% of Turo, the equity of publishing giant DotDash Meredith, Care.com, Vivian Health, and other IAC companies for “free”. MGM is seeing continued strength at its Vegas properties and now has the tailwind of China’s domestic re-opening for its Macau properties. This is one of our largest positions, and we remain confident in this portfolio of businesses and IAC’s ability to allocate capital.”

10. Las Vegas Sands Corp. (NYSE:LVS)

Upside Potential: 18.20%

Price target: $70.92

Number of Hedge Fund Holders: 50

Las Vegas Sands Corp. (NYSE:LVS) owns and operates integrated resorts in Macao and Singapore. The stock is already up by about 22% for the year as investors take notice of the company’s strong business in Singapore and improving prospects in the Macao region of China. It reported a $549 million in revenues from its Marina Bay Sands resorts in Singapore, with total revenues coming in at $848 million. In the last quarter, the company also generated the first billion dollars in revenues from its operations in the Macao region.

As more people travel to Singapore and Macao, the company aims to deliver impressive results. Similarly, analysts are confident the company will continue outperforming, going by the $70.92 price target, implying an 18.20% upside potential from current levels.

According to the Insider Monkey database, 50 hedge funds held stakes in Las Vegas Sands Corp. (NYSE:LVS), with a combined value of $783.7 million in Q1 2023. The most notable shareholder in Las Vegas Sands Corp. (NYSE:LVS) is Steadfast Capital Management, with 1.94 million shares worth $111.45 million.

In the investor letter for the first quarter of 2023, Baron Funds expressed its views on Las Vegas Sands Corp. (NYSE:LVS):

“In the first quarter of 2023, we re-acquired shares in Macau-centric casino gaming companies Wynn Resorts, Limited and Las Vegas Sands Corp. (NYSE:LVS) with the following considerations in mind:

Since the early days of the COVID-19 pandemic in 2020 through mid-2022, the shares of Wynn and Las Vegas Sands significantly underperformed the share price performance of other U.S.-centric casino gaming and lodging companies due in large part to extremely limited travel mobility to Macau during China’s Zero-COVID policy. Just as business activity and the shares of U.S.-centric casino gaming companies rebounded sharply once people felt comfortable to travel to Las Vegas and other U.S. regional gaming markets, we have felt that Macau business activity and the shares of Macau-centric casino gaming companies would follow in the footsteps of Las Vegas-centric and other U.S. gaming and lodging companies and inflect positively once people were permitted to travel to Macau more freely.…” (Click here to read the full text)

9. Delta Air Lines, Inc. (NYSE:DAL)

Upside Potential: 23.80%

Price target: $59.88

Number of Hedge Fund Holders:56

Delta Air Lines, Inc. (NYSE:DAL) has been one of the best-performing airlines rallying 37% year to date on delivering impressive quarterly results amid strong air travel demand that has defied fears of an economic slowdown. The airline is benefiting from strong demand for premium first-class seats and a significant drop in fuel costs. It delivered earnings of $2.68 a share in Q2 against the $2.40 expected as revenues jumped to $14.61 billion against the $14.49 expected, thanks to a 16% capacity increase.

Likewise, analysts remain confident about its prospects, with a $59.88 price target implying a 23.80% upside potential.

During the analysis of 943 hedge fund portfolios for their Q1 2023 investments, Insider Monkey discovered that 56 of them had chosen to invest in Delta Air Lines, Inc. (NYSE:DAL). Among these investors, Thomas E. Claugus’ GMT Capital emerged as the largest stakeholder in our database, holding a significant position valued at $217 million.

8. Ryanair Holdings plc (NASDAQ:RYAAY)

Upside Potential: 25.22%

Price target: $137.75

Number of Hedge Fund Holders:17

Ryanair Holdings plc (NASDAQ:RYAAY) is another cheap stock worth paying attention to in the travel and tourism industry as it continues to see improved traffic growth on its scheduled passenger airline services. A rebound in air traffic from pandemic lows has seen the airline raise its traffic view for the year to 185 million for 168 million. It also continues to deliver impressive traffic numbers due to up-bit air travel demand.

Analysts are confident about Ryanair’s prospects as the air travel business recovers from the COVID-19 slowdown. Consequently, they have an average price target of $137.75, implying a 25.22% upside potential from current levels.

17 of the 943 hedge funds surveyed by Insider Monkey had held Ryanair Holdings plc (NASDAQ:RYAAY)’s shares in Q1 2023. Out of these, the firm’s largest investor is Natixis Global Asset Management’s Harris Associates through its 10.15 million shares that are worth $957 million.

7. Copa Holdings, S.A. (NYSE:CPA)

Upside Potential: 26.27%

Price target: $148.63

Number of Hedge Fund Holders: 33

Headquartered in Panama City, Panama, Copa Holdings, S.A. (NYSE:CPA), together with its subsidiaries, offers airline, passenger, and cargo services. It offers 327 daily scheduled flights to 78 destinations in 32 countries as more people travel to various destinations around the globe. The company continues to register a booming business. Its net profit increased to $121.5 million in Q1 from $89.4 million before the pandemic.

It stands out as one of the best travel stocks as it benefits from travel and cargo business growth. Analysts have a $148.63 price target on the stock, implying a 26.27% upside potential from current levels.

As of the end of the first quarter, there were 33 hedge funds in Insider Monkey’s database that held stakes in Copa Holdings, S.A. (NYSE:CPA), compared to 26 funds in the previous quarter. Ken Griffin’s, Citadel Investment Group with 836,618 shares, is the biggest stakeholder in the company.

6. Trip.com Group Ltd (NASDAQ:TCOM)

Upside Potential: 27.93%

Price target: $46.17

Number of Hedge Fund Holders:41

Trip.com Group Ltd (NASDAQ:TCOM) has carved a niche as a provider of accommodation reservations, transportation ticketing, packaged tours, and corporate travel management services. Acting as an agent for hotel-related transactions and selling air tickets, the company is benefiting from a booming tourism and travel industry. Its already tapped the power of artificial intelligence with a new travel-oriented large language model dubbed Wendao that will allow its customers to access accurate travel data.

 Even though the stock is yet to register a significant move to the upside year to date, analysts have an average price target of $46.17, implying the stock could rally 27.93% from current levels.

As of the first quarter of 2023, Insider Monkey’s database revealed that 41 hedge funds retained their investments in Trip.com Group Ltd (NASDAQ:TCOM), compared to 36 funds in the previous quarter. Among these hedge funds, Pzena Investment Management, managed by Richard S. Pzena, stood out as the most significant shareholder, holding an impressive 7.89 million shares worth $297.18 million in the company.

In its Q4 2022 investor letter, Artisan Partners provided a statement or commentary regarding Trip.com Group Limited (NASDAQ:TCOM):

“Trip.com Group Limited (NASDAQ:TCOM), a Chinese online travel agency, was the second-largest contributor to return in 2022. Trip.com is the dominant supplier of online travel reservations and is expected to benefit from China’s loosening COVID-19 restrictions on both domestic and international travel. Management of Trip.com has wisely spent the COVID-19 lockdown period reinforcing and improving the company’s market position and reducing unnecessary costs. We expect earnings to boom over the next year as travel picks up. Other investors appeared to agree, pushing the share price up 42% in 2022.”

5. Makemytrip Ltd (NASDAQ:MMYT)

Upside Potential: 32.70%
Price target: $39
Number of Hedge Fund Holders:12

MakeMyTrip Ltd (NASDAQ:MMYT) is one of the companies that has seen its fortune improve with growth in the tourism industry. As a provider of travel products and solutions in India, the U.S., Singapore Thailand, among other top travel destinations, it continues to elicit booming business. After reporting an operating loss of $18 million in 2021, the company bounced back to an operating profit of $70.3 million in fiscal 2023. The bounce back to profitability comes from benefiting from government policies aimed at boosting travel and tourism.

Consequently, analysts remain bullish about the stock, with an average price target of $39, implying a 32.70% upside potential from current levels.

In the first quarter of 2023, 12 hedge funds had stakes worth $85.86 million in Makemytrip Ltd (NASDAQ:MMYT). In addition, Marshall Wace LLP held 1.26 million shares of Makemytrip Ltd (NASDAQ:MMYT) shares, valued at $30.91 million, making it the company’s most significant stakeholder.

4. The Walt Disney Company (NYSE:DIS)

Upside Potential: 38.44%
Price target: $120.53
Number of Hedge Fund Holders: 95
The Walt Disney Company (NYSE:DIS) is a global media and entertainment conglomerate that is famous for its iconic brands, creative minds and innovative technologies. The Walt Disney Company (NYSE:DIS) had a mixed performance in 2023, as it faced both challenges and opportunities in its various businesses. The company reported revenue growth of 10% and 13% for the first and second quarters of 2023, respectively, compared to the same periods in 2022.

The Walt Disney Company (NYSE:DIS) has a consensus rating of Moderate Buy, derived from 12 buy ratings and 5 hold ratings. The average price target for the company is $120.53, with the highest analyst price target at $147 and the lowest forecast at $88. On average, the price target indicates a 38.44% increase from the current price of $87.06.

Based on Insider Monkey’s data, The Walt Disney Company (NYSE:DIS) saw a decrease in sentiment from hedge funds, with 95 funds holding a positive outlook on the company at the end of the first quarter of 2023, compared to 99 funds in the previous quarter. Notably, Trian Partners, led by Nelson Peltz, is a significant investor in the company, holding 5.92 million shares.

Here is what VGI Partners Global Investments Limited specifically said about The Walt Disney Company (NYSE:DIS) in its 2022 annual investor letter:

“The Walt Disney Company (NYSE:DIS) is a diversified media conglomerate operating media networks, theme parks, film and TV studios and direct-to-consumer streaming services. It is the global leader in theme parks with hotels and cruise lines aimed at families. Key assets within Disney are the instantly recognisable entertainment franchises that have multiple avenues of monetisation such as Mickey Mouse, Star Wars, ABC and Marvel’s Avengers.

Disney’s share price declined due to a number of factors in 2022, presenting us the chance to purchase a long-admired business and its unique collection of valuable intellectual property assets at what we consider to be a very attractive valuation. Summarily, the EPS of Disney has declined from US$7 in 2018 to ~US$2.60 in 2022 but we believe that the earnings power of the assets has not diminished to anywhere near this extent.…” (Click here to read the full text)

3. H World Group Limited (NASDAQ:HTHT)

Upside Potential: 45.63%
Price target: $60.35
Number of Hedge Fund Holders: 33

H World Group Ltd (NASDAQ:HTHT) is another cheap travel stock worth closely watching as it develops leased and owned and franchised hotels in China. It is one of the companies well poised to benefit from opening Chinese borders with the asking of travel restrictions due to COVID-19.

While this stock is down by about 3% year to date, it appears to be trading at a discount as analysts have an average price target of $60.35, implying it could rally by 45.63% from current levels.

As of the end of the first quarter of 2023, Insider Monkey’s database indicates that 33 hedge funds, tracked by the platform, held stakes in H World Group Limited (NASDAQ:HTHT). The combined value of these hedge funds’ stakes amounted to $864.72 million.

2. Frontier Group Holdings Inc (NASDAQ:ULCC)

Upside Potential: 49.35%
Price target: $14.83
Number of Hedge Fund Holders:20

Frontier Group Holdings Inc. (NASDAQ:ULCC) is one of the airlines that has benefited from more Americans hitting the skies to travel from one destination to another. The low-fare airline company provides air transportation for passengers in the U.S. and in the Americas. The airline delivered a loss of $0.06 a share in Q1, better than analysts’ expected loss of $0.08 a share. In addition, revenue was up 40% year over year to $848 million.

While the stock has barely moved for the year, analysts are optimistic about its long-term prospects, with an average price target of $14.83, implying 49.35% upside potential.

Insider Monkey’s database shows that 20 hedge funds tracked by Insider Monkey had stakes in Frontier Group Holdings Inc (NASDAQ:ULCC) as of the end of the first quarter of 2023. The total worth of these hedge funds’ stakes was $144.94 million. The biggest stakeholder of Frontier Group Holdings Inc (NASDAQ:ULCC) was Ancient Art (Teton Capital) which had a $42.89 million stake in the company.

1. Playa Hotels & Resorts NV (NASDAQ:PLYA)

Upside Potential: 50.53%
Price target: $12.75
Number of Hedge Fund Holders: 24
Playa Hotels & Resorts NV (NASDAQ:PLYA), a leader in luxury all-inclusive oceanfront resorts in the Caribbean, has been on an impressive run rallying by nearly 30% year to date. The company has benefited from an uptick in tourism traffic and booking prices following the lifting of COVID restrictions and restoration of tourist traffic. Its operating marine has already reached its record high of 28.1%.

Playa Hotels & Resorts NV (NASDAQ:PLYA) currently holds a consensus rating of Moderate Buy. This rating is derived from 3 buy ratings, 0 hold ratings, and 1 sell rating provided by analysts. Playa Hotels & Resorts NV has an average price target of $12.75, with the highest analyst price target being $16 and the lowest forecast set at $8. The improving business environment in the tourism sector is one reason analysts have an average price target of $12.75, implying a 50.53% upside potential to current levels.

According to Insider Monkey’s first-quarter 2023 hedge fund survey, out of the 943 hedge funds analyzed, 24 of them had chosen to invest in Playa Hotels & Resorts NV (NASDAQ:PLYA). Notably, among these investors, Davidson Kempner, led by Thomas Lenox Kempner, emerged as the largest shareholder, holding a significant stake valued at $145.22 million.

In its investor letter for the second quarter of 2023, Silver Beech Capital provided a comment or statement concerning Playa Hotels & Resorts N.V. (NASDAQ:PLYA):

“Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is a small-capitalization owner/operator of 25 all-inclusive resorts in Mexico (Cancun and Pacific Coast), the Dominican Republic, and Jamaica. Playa’s portfolio is branded (mostly Hilton and Hyatt), includes primarily luxury/upscale resorts, and operates at among the highest margins in the hotel industry. Playa’s resorts are irreplaceable assets in supply-constrained markets that continue to benefit from rising post-COVID international tourism.

We believe the public market discounts Playa’s shares based on recessionary fears, however, strong international flight data into Playa’s regional airport hubs do not support this view, and spot private market valuations for Playa’s hotels exceed its public market valuation. Management has demonstrated impressive capital allocation to address this valuation gap by moderating growth capital expenses for only the highest return projects and looking to sell select strategic resorts and repurchase shares at today’s attractive level. Over the last two quarters, Playa has repurchased more than 4% of the company’s outstanding shares. The company trades at a TEV/EBITDA of 7.6x (2023E), and a low double-digit free cash flow yield. We believe Playa’s intrinsic value is more than 50% greater than its June 30 share price.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily newsletter to get  the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out our articles on 12 Best Performing Bank Stocks in 2023 and 11 Cheap Chinese Stocks to Buy According to Analysts.

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Disclosure: None. 12 Cheap Travel Stocks to Buy Now is originally published on Insider Monkey.