Travel stocks have had a rough time, mostly because the industry is proving to be a mixed bag these days.
On one hand, vaccinated Americans seem eager to vacation again and revisit their favorite destinations. On the other hand, a surge in the Delta variant of Covid-19 and speculation that vaccine mandates for air travelers might be forthcoming seems to have cooled off the industry.
Yet despite these touchy times, there remain a number of leading travel stocks that offer great investment opportunities and are managing to outperform the broader stock market right now.
These are companies whose stocks offer the potential for strong gains . Here are three travel stocks to buy even in these uncertain times that we continue to live in.
Travel Stocks to Buy: Caesars Entertainment (CZR)
Vegas, baby! The hotel and casino operator whose flagship properties, Caesars Palace and The Flamingo, are synonymous with the gambling mecca that is Las Vegas, is a solid bet as the economy continues to strengthen and people get out and travel once again.
Year-to-date, CZR stock is up 51% at more than $108 per share. In the past month alone the stock has risen more thn 17%. Caesars Entertainment’s shares have continued to appreciate while many other casino operators have fallen on fears that the Chinese government is cracking down on gambling.
Unlike many other U.S.-based casino operators that have operations based in China and throughout Europe, all of Caesars Entertainment’s hotels and casinos are situated in America, with the exception of one property that is based in Windsor, Ontario, Canada across the river from Detroit.
The majority of Caesars 50 properties are located in and around Las Vegas and Reno or in Atlantic City. While Caesars has been criticized in the past for not expanding internationally, the company’s homegrown strategy now insulates it from overseas volatility.
Delta Airlines (DAL)
If you’re going to roll the dice on an airline stock right now, Delta looks like the safest bet.
While other airlines such as Southwest (NYSE:LUV) grapple with pilot shortages and scheduling chaos and American Airlines (NASDAQ:AAL) wrestles with record debt levels, Delta Airlines looks comparatively healthy and stable.
The Atlanta-based carrier has the lowest debt level and best profit margins of any U.S. airlines coming out of the pandemic. Delta recently announced that it is buying back $1 billion of high-cost bonds that it issued during the pandemic and raised $1.5 billion of cash in the latest quarter, ending its Covid-19 cash burn.
While Delta Airlines has followed other carriers and lowered its forward guidance for the remainder of this year as resurgent Covid-19 cases hamper the travel industry, the airline still expects to report a profit for the current third quarter.
The company also is in the midst of revitalizing its fleet by the end of 2025, replacing its oldest planes with state-of-the-art models. This should help the company achieve fuel savings of more than 5%. All the positive news has not had a great impact on DAL stock, which is up only 3% on the year, trading today around $40.
However, Investors should take heart from the fact that the median price target on DAL stock is $55 per share, suggesting that the stock could rise from its current price.
Travel Stocks to Buy: Airbnb (ABNB)
Vacation rental and homestay company Airbnb looks to have finally turned a corner. While the broader market has been slumping throughout September, ABNB stock has climbed 11% in the past month to more than $168 per share.
It’s a welcome reversal for shareholders who have had to watch as Airbnb stock has declined steadily from a mid-February peak of $219.94.
Year-to-date, Airbnb shares are now up nearly 30%. Investors will be hoping the company can sustain the momentum through the final quarter of this year and into 2022.
The rally in ABNB was sparked by the company announcing that it has reached a record level of reservations for booked travel and that its current reservations are 40% higher than in 2019 before the global pandemic.
That was the news Wall Street had been waiting to hear. Plus, the increased bookings through its portal are not confined to the U.S. but are being seen around the world. Airbnb currently has more than seven million properties for rent in 220 countries. The company’s popularity shows no signs of waning any time soon.
Disclosure: On the date of publication, Joel Baglole held a long position in LUV. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.