The search for the best travel stocks has recently gained momentum, and for good reason. Post-pandemic, travel and tourism sectors have rebounded impressively. After witnessing a major slump, where travel took a backseat for many customers, we now observe an impressive resurgence. However, the upswing isn’t incidental, as financial reports highlight robust financial health with burgeoning demand. Travel-related entities continue to bask in a sales revival, setting the stage for a luminous future. Coupled with sustained consumer spending on tourism, the path ahead is incredibly clear for investors. These top travel stock picks stand out, outpacing peers and shining as investment beacons.
Best Travel Stocks: Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) with its vast network spanning over 300 destinations across six continents, has long been recognized as one of the global giants in aviation. Its diverse revenue channels, encompassing domestic and international travel, cargo operations, loyalty programs, and ancillary services, have enabled it to become a juggernaut in its niche. However, the first quarter of 2023 saw a dip, registering a net loss attributed to new pilot contracts and consequential pay raises. However, the strategic move by Delta seems to be a long-term investment in its workforce.
Fast forward to the second quarter, and the airline is soaring once again. Delta comfortably beat market expectations by boasting $2.68 earnings per share and raking in revenue of $15.58 billion. Additionally, it posted a staggering 149% uptick in net income from the prior-year quarter, which is a whopping $1.8 billion. As if these weren’t enticing enough for the market spectators, Delta’s announcement of reinstating its dividend and forecasting higher sales and earnings for the latter half of the year fuels further optimism. Thus, it is among the best travel stocks in my eyes.
MGM Resorts (MGM)
MGM Resorts (NYSE:MGM) is on an electrifying streak, with its stock up a remarkable 30% year-to-date. This spirited rebound can be largely credited to the grand reopening of its iconic Las Vegas and Atlantic City casinos. Moreover, its foray into the burgeoning realm of online gaming has also played a significant hand in its stock’s ascent.
A deep dive into the numbers paints an even rosier picture. MGM’s earnings per share leaped to 59 cents, a dramatic climb from last year’s modest four cents in its most recent quarter. The company’s digital arm, BetMGM, achieved positive EBITDA in the second-quarter and exuded confidence in a profitable second half. Over in the East, MGM’s China casino revenue skyrocketed a staggering 418% year-over-year, raking in a stellar $741 million in the previous quarter alone. Moreover, the recent announcement about BetMGM’s ambitious UK expansion and strategic partnership with hospitality titan Marriott bodes well for a promising trajectory in the coming years.
Hilton (NYSE:HLT), a revered titan in the hospitality sector, has been rallying this year, with the stock up by double-digit margins. Moreover, it presents an encouraging picture as we peel back the layers of its second-quarter performance. A robust demand landscape translated into an 18.8% revenue spike, topping $2.66 billion, while its adjusted EBITDA clocked in at a commendable $811 million, up from last year’s $679 million. Furthermore, during the same quarter, the hospitality behemoth unveiled 92 new hotels, encapsulating 14,000 rooms and netting an 11,200 room growth. Moreover, it added a healthy 36,000 rooms to its burgeoning development pipeline.
Like its peers in the lodging arena, Hilton’s balance sheet bore the scars of the crippling Covid 19 pandemic. But, here’s where Hilton stands apart: an unwavering profitability streak with an envious net margin of 13.23%, which is in the top 25%. Analysts rate it as a “Moderate Buy,” with a 5% upside.
Airbnb (NASDAQ:ABNB) is charting an exciting trajectory in the travel sector, making it a compelling name to watch. Looking at the hard numbers, the firm boasted a whopping $2.5 billion in sales for the second quarter, marking an 18% leap year-on-year. Likewise, the company reported a free cash flow () of $900 million, with an annualized FCF potential hovering around the $4 billion mark.
Airbnb’s second-quarter results have shown that travelers increasingly gravitate towards longer stays. A case in point is that 18% of nights booked in the second quarter on Airbnb were long-term stays, punctuated by a surge in month-long reservations. Globally, the company is expanding its footprint with a 22% surge in nights and experiences booked year-on-year in Latin America and an impressive 24% growth in the Asia Pacific.
Furthermore, its latest offering in Airbnb Rooms, priced at an enticing average of $67 per night, is crafted to widen the horizon for a broader spectrum of travelers, especially resonating with the younger generation. That’s why I believe it is one of the best travel stocks for the long term.
2020 was a test of resilience for Disney (NYSE:DIS), with the global pandemic playing an unwelcome spell on the entertainment juggernaut, temporarily halting the symphony of its theme parks and putting its cruise lines into an unprecedented slumber. However, the entertainment giant has come roaring back. While Disney+ and its other streaming offerings have stolen the limelight for a while, they are essentially a cover for the impending renaissance of its parks and resorts business post-pandemic.
The expansion of its global footprint and infusion of fresh attractions every quarter underlines the unyielding strength of the firm’s Parks and Resorts division. As per insights from Morgan Stanley analyst Benjamin Swinburne, who retains an optimistic outlook on Disney with an overweight rating and a $105 price target, the true protagonist in Disney’s saga is its Parks segment. Showcasing a stellar performance, the segment celebrated a 13% year-over-year revenue growth, hitting a majestic $8.33 billion and an 11% year-over-year surge in operating income, reaching a commendable $2.43 billion. This is why it is one of the best travel stocks right now, in my eyes.
Royal Caribbean Cruises (RCL)
Royal Caribbean Cruises (NYSE:RCL) is the second-largest cruise line operator globally, which is on an incredible run at the stock market this year, registering a 95% gain year-to-date. Navigating the turbulent waters of the travel sphere, Royal Caribbean’s financial compass points in a promising direction.
Zooming into its June quarter reveals glowing numbers with a revenue influx of $3.52 billion, marking a 61.3% year-over-year growth, outpacing analyst predictions by 3.2%. Further, its net income swelled by almost 188% year-over-year to touch $458.8 million. Additionally, with a healthy net profit margin blossoming by 154.5% to 13%, its financial positioning is encouraging.
Moreover, the company echoes a sentiment that “demand for 2023 sailings has soared beyond expectations, with 2024 bookings already riding a wave of record prices.” This cements the prospect of brighter quarters ahead.
Expedia Group (EXPE)
Seattle-based Expedia Group (NASDAQ:EXPE) boasts a formidable presence in the online travel arena, harnessing its expansive network to craft a consumer experience par excellence. Interestingly, Expedia is positioned to reap dividends as the world steadily warms up to the allure of remote work flexibility.
Diving into its latest earnings report, Expedia flaunted a 6% uptick in sales, with its earnings-per-share clocking in at $2.54. Their fiscal muscle is further flexed by a whopping $1.2 billion in share repurchases this year alone. The narrative gets even better, with gross bookings for lodging blooming by 9% year-over-year.
Furthermore, the company judiciously rolled out a slew of cost-saving strategies last year, fine-tuned its operations, and amplified its brand resonance. As a result, its profitability has taken a triumphant leap, outpacing its five-year benchmarks across multiple metrics. The cherry on top is that the stock is trading at a value of 1.2 times its forward sales, a figure that seems very compelling.
On the date of publication, Muslim Farooque 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