Investors should have been looking at travel stocks to buy over the last few months, given the move we’ve seen in this group. Whether there’s a recession coming or not, consumers don’t seem to be worried. In fact, the only thing they seem worried about is missing their flight.
Stocks for airlines, hotels, cruises, travel websites and more have been exploding higher. The TSA recently screened a record number of travelers. Inflation may still be present, but job growth and wage growth are too, allowing consumers to take that extra vacation or last-minute getaway.
Earnings have been rolling in and while the results have been solid, the reactions have been mixed. In many cases, that’s because these stocks have rallied so far, so fast. Either way, we’ve seen a surge in travel stocks. While some investors remain leery of this group, the price action warrants an additional look at the best travel stocks.
Let’s look now at three of the best travel stocks available, in my opinion.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) really put on a show earlier this year. At one point, shares rallied in 15 straight days. From May 25 to June 15, the stock didn’t have one daily close in the red. That finally came on June 16 when it fell all of 0.21%.
Ultimately, Delta stock went on an eight-week win streak and climbed more than 50% from its May low to the July high.
In that mix, the stock reported earnings. While shares did not react well to the news — falling just 0.5% on the day but fading over 4% from the highs — the report was quite good. The company delivered an earnings and revenue beat with “record revenue in the June quarter” and upbeat, solid guidance.
Now, DAL stock is trading in the key $45 area. That was a major breakout point for the stock, while shares are also testing into the 10-week moving average. If the stock can hold the $43 to $44 level, a rebound back to the 2023 highs could be in play.
Norwegian Cruise Lines (NCLH)
All of the cruise stocks have been trading well, but Norwegian Cruise Lines (NYSE:NCLH) caught my eye.
Norwegian lags its two main peers in various stock performance measures over the last few months. However, just because Carnival Cruise (NYSE:CCL) and Royal Caribbean (NYSE:RCL) have performed better doesn’t mean Norwegian should be snubbed.
The stock recently had a negative reaction to earnings, falling about 12% on Aug. 1. However, shares traded right down into the $17.50 region and bounced after it found the prior breakout level and the 50-day moving average.
As long as it holds the 10-week moving average, bullish investors have a solid technical reason to own this name. The valuation is actually somewhat reasonable too, as shares trade at roughly 24 times earnings, but earnings are forecast to more than double this year and next year. If those estimates come to fruition, NCLH stock seems undervalued at 12 times 2024 earnings.
Airbnb (ABNB)
Airbnb (NASDAQ:ABNB) seems to be flying under the radar, but after a two-month 38.5% rally, I’m not so sure that should be the case.
The stock has been on fire, slowly but surely grinding its way higher. The inconspicuous rally has not stood out to investors who haven’t been looking for travel stocks. The one hang up could be earnings.
The firm is expected to report on Thursday Aug. 3. The announcements could either ignite shares higher and keep this rally going, or it could result in a sell-the-news reaction. While it’s hardly a large sample size, investors sold Delta and Norwegian lower on earnings. If they do that to Airbnb stock, investors should keep an eye on the downside.
A break of $145 could usher in the $135 to $140 area, where the stock would find its 10-week and 21-day moving averages. A slightly deeper dip could put the mid- to high-$120s in play, which was a prior breakout area and where the 50-day moving average currently sits. On the upside, a move back over $150 and the current 2023 high of $154.95 could set the stage for a rally to the $167 zone.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
