On August 26, we took a look at the slow-simmering yet inevitable comeback of the travel sector.
If you haven’t had the chance to read it, here’s a brief synopsis of what we discussed:
“Over the course of the pandemic, travel-focused stocks have been facing a barrage of challenges; each time the pandemic appears to be waning, it flares anew. Each subsequent flare-up triggers a fresh round of restrictions, coupled with a fresh round of travel cancelations and postponements.
“This stop-start cycle has weighed heavily on travel stocks for the last several weeks (and months), but the persistent weakness of these stocks feels like the proverbial ‘darkness before the dawn.'”
And as the last few weeks have progressed, I’ve homed in on the travel sector even further.
As such, in the brand-new Fry’s Investment Report Monthly Issue, I recommended an underdog stock poised to soar in the online booking space (to learn how to access that pick — and the new September issue — go here).
But for today, here’s how the “dark” of the travel gloom is waning… and how even more stocks may see the same dawn.
A Travel Comeback Is Possible
First, we know that travel volumes are increasing month-by-month in most major travel markets, despite the persistent threat that delta poses.
Second, we know that rising vaccination rates coincide with rising travel activity — both because vaccinated folks are choosing to travel and because most countries are requiring vaccinations as a precondition for entry.
At some point, therefore, rising vaccination rates should promote even greater travel activity, which should eventually flip the outlook for travel-related stocks from doom and gloom to recovery and optimism.
On travel booking tech company Sabre’s (NASDAQ:SABR) Aug. 3 earnings teleconference, CEO Sean Menke optimistically stated:
“Travel volume trends continue to improve… In fact, the recovery accelerated significantly in the second quarter…
“As we have discussed in the past, we believe there is pent-up demand to travel, but conditions need to be met for this demand to be realized as bookings… Passengers need to feel safe onboard planes and at their destinations. Vaccination levels moving higher have had a direct correlation with traveler confidence…
“We expect increasing global vaccination rates and the removal of or reduction in travel restrictions… will be a catalyst from improvement in corporate and international travel…
“We have already begun seeing green shoots in corporate travel, particularly in the U.S…”
While hoping for the best, however, Sabre, like many travel companies, has been busily preparing for the worst. During the last 16 months, for its part, Sabre has made a series of transactions to bolster liquidity and maintain flexibility.
But Sabre and most other travel companies are not desperate… at least not yet.
So far, I have been wrong about when improving travel trends would boost the prices of travel-related stocks. The virus fooled me… and perhaps it will again.
Certainly, I have no idea how many more variants may be heading our way, nor how well current vaccines will perform months down the road. But come what may, I expect the desire to travel to overcome whatever Covid-19-related obstacles try to stand in its way.
Particularly for a specific travel booking firm I’d love to tell you more about…
Rays of Light Piercing Through the Gloom
Travel-related stocks have been suffering for so long now that even a modest improvement in Covid-19 trends and headlines could propel them to large and rapid gains.
Therefore, I believe it’s worthwhile to take advantage of the current weakness in the travel sector by adding exposure to it. In fact, just yesterday, I just recommended members of Fry’s Investment Report to get in on one of the world’s best — and strongest — travel-focused enterprises.
Not only is it a dominant company with a commanding market share, but it also operates primarily in one of the only countries in the world where domestic travel volumes are hitting pre-Covid-19 levels.
You can learn how to get the name of the company here.
It is a stock with “baby with the bathwater” characteristics. In other words, the stock has been suffering along with the entire travel sector, even though its prospects for recovery are both stronger and more immediate than that of most other travel plays…
Simply stated: People are traveling again… and this company is benefiting.
P.S. First electricity, then the internet. Could this new $56 trillion platform be the next great groundbreaking tech? I think so. Click here to see why.
NOTE: On the date of publication, Eric Fry did not own either directly or indirectly any positions in the securities mentioned in this article.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.