The search for the best travel stocks is heating up. With September showing an impressive $104 billion in travel spending and a steady 3.5% growth year-to-date (YTD), the sector shows potential for growth even in challenging economic conditions. In particular, air travel demand stood out with a robust 10% increase.
As we approach Travel Tuesday on Nov. 28, these travel stocks shine with opportunity. Travel Tuesday, a post-Thanksgiving period akin to Black Friday and Cyber Monday in the United States, typically boasts lucrative travel deals. For risk-tolerant investors, this period offers a unique opportunity. The anticipated spike in bookings and an upbeat industry mood suggest a potential boost in these stocks’ market performance, making them an enticing option in this peak travel season.
Airbnb (ABNB)
Among the best travel stocks, Airbnb (NASDAQ:ABNB) has carved an impressive niche in the travel sphere. The firm’s third-quarter financials demonstrated robust results, with a striking $3.4 billion in sales, up 17.7% year-on-year (YOY). This financial uptick is accompanied by an impressive net income of $4.37 billion and a free cash flow of a whopping $1.31 billion, underlining Airbnb’s solid market position.
Exploring deeper, ABNB’s success also lies in changing travel trends. The company reported a significant 14% rise in its nights and experiences booked segment, totaling over 113 million. It indicates a shift towards longer stays, a trend that’s playing to Airbnb’s strengths. Additionally, a 19% increase in listings suggests its effective approach.
Moreover, its innovation continues with its introduction of Guest Favorites. It’s a curated collection of 2 million top-rated homes based on extensive feedback from over half a billion trips, giving guests a clear preview before booking. With this, accompanied by analysts from TipRanks projecting an 8.74% upside potential, Airbnb is cementing its status as a key player in the industry.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL), a titan in the aviation industry, boasts a vast network covering over 300 destinations across six continents. The airline’s impressive trajectory is evident in its third-quarter earnings. It reported EPS of $2.03, surpassing the London Stock Exchange Group (LSEG) expectation of $1.95, and a revenue of a robust $15.49 billion, culminating in a remarkable $2 billion net income.
Further reinforcing investor confidence, Delta forecasts robust travel demand into the December quarter, projecting revenue growth of 9% to 12% compared to the same period in 2022. This optimism is backed by the airline’s recent reinstatement of its quarterly dividend, suspended in March 2020, now rewarding shareholders with a 10 cents per share dividend.
Adding to its list of positives, Delta is gearing up for the busy Thanksgiving and Travel Tuesday period. With plans to transport over 6 million passengers from Nov. 17 to 28, the airline is well-prepared to offer timely and safe travel during this crucial U.S. holiday season.
MGM Resort (MGM)
MGM Resorts (NYSE:MGM) has been riding a wave of success, with its stock value surging by an impressive 20% YTD. Despite facing a setback with a cyberattack in September, the company rebounded strongly, reporting an operating income of $370 million and a whopping revenue of $3.97 billion for the latest quarter, surpassing expectations by $80 million. The easing of COVID-19 travel restrictions in Macao, China is the primary cause of the surge.
Also reflecting its financial strength, MGM has repurchased about $1.7 billion in stock this year, reducing its share count by over 30%. This move demonstrates MGM’s incredible position and commitment to delivering shareholder value.
Furthermore, MGM’s CEO Bill Hornbuckle expressed enthusiasm for the Formula 1 Heineken Silver Las Vegas Grand Prix, a high-profile race event. The event was a success for MGM, showcasing its ability to leverage major events for business growth. Additionally, the company’s strategic partnership with Marriott signals a promising future, setting the stage for continued success in the years ahead.
Hilton (HLT)
Hilton Worldwide (NYSE:HLT) stands tall as a leader in the hospitality industry and among the best travel stocks, boasting a global footprint with over 7,300 properties and more than 1.1 million rooms. Additionally, Hilton’s stock has risen by an impressive 34.6% YTD and 22% over the past year. This uptrend is underpinned by its stellar third-quarter performance, showcasing a robust $2.67 billion revenue and $379 million in income, alongside a commendable $834 million adjusted EBITDA, surpassing market expectations.
Moreover, Hilton’s growth is bolstered by its Hilton Honors loyalty program expansion, now with more than 173 million members, enhancing its customer retention and growth. Coupled with that, its extensive pipeline of hotels under construction promises to significantly boost future earnings and EBITDA.
Further strengthening its position, Hilton offers attractive Black Friday, Cyber Monday, and Travel Tuesday deals, appealing to a wide customer base. This move, along with its stalwart performance, supports its 25x forward earnings valuation and makes it an attractive option for investors.
Royal Caribbean Cruises (RCL)
Royal Caribbean Cruises (NYSE:RCL), the world’s second-largest cruise operator, is showing stellar performance in the stock market with a remarkable 116.67% gain YTD. Its latest quarter financials are equally impressive, boasting a 39% YOY revenue increase to $4.16 billion and a net income of $1.1 billion.
Adding to its appeal, Royal Caribbean is innovating passenger experiences. A notable upgrade is the incorporation of SpaceX Starlink satellite internet across its fleet, promising enhanced connectivity onboard. This customer-centric approach highlights the company’s commitment to elevating the cruising experience.
Furthermore, the company’s forward-looking statements are equally optimistic. Demand for 2023 sailings has far surpassed expectations, and bookings for 2024 are at record highs with unprecedented prices. TipRanks analysts have also suggested a “Strong Buy,” with a projected 15.36% upside. Moreover, Royal Caribbean is engaging customers with Travel Tuesday deals, further enhancing its appeal and potential for continued stock growth.
Expedia Group (EXPE)
Expedia Group (NASDAQ:EXPE), a Seattle-based titan in the online travel market, recently showcased its financial prowess with a stellar earnings report. The group announced a record revenue of $3.9 billion, with net income soaring to $425 million. Their adjusted EBITDA hit an impressive $1.2 billion, marking a 13% increase and a margin expansion of 110 basis points over the previous year, underscoring their successful growth trajectory.
In a move to revolutionize the travel rewards landscape, Expedia Group introduced One Key, a novel loyalty program. This program uniquely amalgamates Expedia, Hotels.com, and Vrbo, offering travelers the flexibility to earn rewards across various travel services. Currently operational in the U.S., One Key is set for a global rollout in 2024.
Furthermore, Expedia is tapping into steady search volumes and heightened interest in European destinations. With Travel Tuesday on the horizon, the group is poised to engage customers with enticing deals, leveraging this opportune moment to further connect and enhance their customer experience.
Disney (DIS)
2020 proved to be a resilience test for Disney (NYSE:DIS), as the pandemic disrupted its theme parks and cruise lines. Yet, this entertainment powerhouse is rebounding, marking a positive shift in its journey. Disney’s stock has seen a modest but steady 6.8% growth YTD, indicating renewed investor confidence.
In terms of financial performance, Disney has reported impressive figures. The company’s revenue soared to $21.24 billion, with adjusted earnings of 82 cents per share, surpassing the anticipated 71 cents. This success reflects Disney’s powerful recovery trajectory.
Furthermore, investor enthusiasm is fueled by Disney+’s subscriber growth, which added seven million members, reaching 150.2 million. Adding to the optimism, Disney announced plans for an additional $2 billion in cost cuts, totaling $7.5 billion in savings this year. With Travel Tuesday just around the corner, this might be an opportune moment for investors to consider Disney as a promising investment, potentially benefiting from the anticipated surge in holiday travel and entertainment spending.
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.
