It’s supposed to be better-than-ever for the average American. Stocks are at record highs, home prices are up and the job market is the best it’s been since the 1960s. Interest rates are low, and baby boomers are flush with cash. Thus, it should be a great time to be in the business of rest and relaxation. Yet, many travel stocks are getting crushed on a new respiratory disease outbreak in Asia that threatens to dampen travel demand and keep people at home.
Last year, people seemed to be traveling all over the world as international tourist arrivals rose by 4% year-over-year. More specifically, international departures based on airline bookings jumped 5% last year, while people traveling from the U.S. was up 9% for January to June of 2019.
However, with tensions present overseas and the recent breakout of the coronavirus in China, it’s no wonder why people may not want to travel at this point in time.
With all of that in mind, let’s take a look at three travel stock to sell before it’s too late.
Travel Stocks to Sell Now: Carnival Corporation (CCL)
Shares of Carnival Corporation (NYSE:CCL), a cruise line operator, are threatening to break down below a three-month uptrend pattern after bonking on overhead resistance near $52 going back to June. That said, watch for a return to the consolidation range seen throughout much of 2019 near $44. This would be worth a loss of roughly 13% from here.
Furthermore, the stock had already been under some clouds of doubt due to tensions with Iran ramping up over the past few weeks. This uncertainty is due to the company being so exposed to oil prices.
Additionally, management had recently guided fiscal year 2020 constant currency net cruise revenues to be up roughly 5%. Also, the company is expecting capacity growth to be on track for a 7% rise as new ships come online. However, since new ships — such as the delayed Mardi Gras vessel — have long lead times, a pullback in travel demand will leave the company vulnerable to a big drop in profitability as ships sail with empty suites or sit idle at port. In addition, the Carnival Radiance is another new ship set to sail for the first time in 2020, renaming the Carnival Victory after a large refurbishment.
Overall, all of these factors make CCL one of the travel stocks to sell right now.
Shares of casino and resorts operator Wynn (NASDAQ:WYNN) have fallen below its 20-day moving average to break out of a two-month uptrend.
That said, a return to the 200-day moving average are looks increasingly likely. This would be worth a loss of roughly 13% from its current levels. The turnaround came near resistance from highs set back in April, as the share price remains well off of the highs near $195 set in early 2018.
While the company is well-known for its Wynn and Encore resorts in Las Vegas, roughly 65% of its revenues during third quarter 2019 came from its Macau operations. However, this could be directly impacted by the coronavirus fears centered in China right now.
Analyst sentiment has appeared mixed recently, with Standpoint Research analysts downgrading to hold while Goldman Sachs added the name to its conviction buy list. Furthermore, Wolfe Research upgraded shares on Jan. 10, while Citigroup downgraded on Jan. 8. Collectively, these are the reasons why Wynn is on my list for travel stocks to sell.
Marriott International (MAR)
Hotel and resort operator Marriott (NASDAQ:MAR) is suffering a breakdown out of a two-month consolidation pattern, and looks set for a test of its 50-day moving average. Watch for a drop back to its 200-day average, which would be a loss of around 8% from current level. Shares have been largely related to a sideways pattern since early 2018, as investors wait for a growth catalyst.
At a meeting with management back in September, RBC Capital Markets analysts highlighted the Asia Pacific region as a potential growth opportunity. This, however, is now threatened by the rise of the expanding coronavirus in China. Also, the company is in the midst of an aggressive growth push. This includes the opening of 1,700 new hotels and the addition of between 275,000 and 295,000 new rooms by 2021; Meaning, a large amount of construction.
That said, shares were recently downgraded by analysts at Raymond James, as well as analysts at Berenberg. CEO Arne Sorenson said earlier this week that the company’s performance in large Chinese cities is going well, but that top-line performance in Hong Kong could be down 50% amid lingering social unrest in the area. All of this combined, and you’ve got just another member on the list of travel stocks to get rid of.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.