Memorial Day weekend signals the unofficial start of summer for most Americans. Meanwhile, on Wall Street, investors concentrate on travel stocks to buy. Pent-up demand and a strong job market mean bookings are surging and the nation is eager to get on the road.
In fact, the AAA forecasts a robust Memorial Day travel season, projecting nearly 43.8 million travelers to embark on journeys exceeding 50 miles. This represents a 4% year-over-year (YOY) uptick and nears the record of 44 million travelers set in 2005. This data underscores a significant rebound in travel demand.
With spending forecast to exceed the pre-pandemic peak by 15%, such a travel boom presents a golden opportunity for investors.
From airlines to hotel chains, several companies stand poised to benefit from the resurgent travel industry. But with so many options in the travel space on Wall Street, where do you begin? Here are three travel stocks to buy that deserve a spot in your portfolio.
Delta Air Lines (DAL)
A stalwart performer among travel companies is Delta Air Lines (NYSE:DAL). Management has demonstrated remarkable resilience in the face of pandemic-related challenges affecting the airline industry. With a robust fleet of aircraft and an extensive route network, DAL has established itself as a contender among travel stocks to buy.
In April, the airline reported robust financial results for the first quarter. Adjusted operating revenue reached $12.6 billion, 6% higher than the first quarter of 2023. Operating income jumped 17% YOY to $640 million. Adjusted diluted earnings per share (EPS) came in at 45 cents, beating Street estimates and surging 80% compared to the prior-year quarter. In addition, management reaffirmed its full-year guidance, expecting earnings of $6-$7 per share.
Investors have noted how Delta has achieved a remarkable reduction in mainline cancellations of 85%, setting new records. This enhanced operational reliability has enabled Delta to significantly outperform its competitors.
As a result, DAL stock has gained close to 27.5% year to date, trading at its highest levels since the pandemic. Shares are changing hands at an attractive 7.5x forward earnings and 0.6x sales. Meanwhile, analysts have a 12-month price target of $58 for DAL, suggesting potential upside of 13% from current levels.
Marriott International (MAR)
Hotel heavyweight Marriott International (NASDAQ:MAR) is the next hospitality company among our travel stocks to buy. Its latest quarterly report showed a 4.2% rise in global revenue per available room. This growth is supported by a 3% increase in the average daily rate and an occupancy rate that climbed nearly 100 basis points YOY.
In recent weeks, Marriott International announced plans to significantly expand its European presence. Management aims to add nearly 100 properties and over 12,000 rooms by the end of 2026. This ambitious growth, representing over 40% of their European development pipeline, will be achieved through hotel conversions and adaptive reuse projects.
So far in 2024, MAR stock has advanced close to 6%. The stock is currently trading at 24.3 times forward earnings and 2.6 times sales. And Wall Street remains optimistic for the prospects of MAR stock with a 12-month median price forecast of $247.50. Interested investors could wait for a pullback toward the $225 level before initiating positions.
Booking Holdings (BKNG)
Rounding out our discussion of travel stocks to buy is Booking Holdings (NASDAQ:BKNG). The company operates a suite of well-known travel brands including Booking.com, Priceline, Agoda, KAYAK, Rentalcars.com, and OpenTable. These platforms offer services ranging from accommodation and car rental bookings to restaurant reservations and travel insurance.
In early May, Booking announced robust quarterly results, reflecting continued recovery in the travel industry. Gross travel bookings grew 10% YOY to $43.5 billion, with room nights booked also increasing by 9%. This strong performance translated into a 17% YOY revenue increase to $4.4 billion. Adjusted net income jumped 61% to $708 million while adjusted EPS surged 76% to $20.39 compared to the prior-year quarter.
Investors were interested to see Priceline recently unveil its latest products featuring new generative artificial intelligence. This update also included a significant upgrade to its existing AI travel assistant, Penny. These advancements, encompassing over 30 new features within the Trip Intelligence platform, aim to improve the travel planning and booking process for consumers.
Since January, BKNG stock has gained over 8%, while shares are trading at 21.2 times forward earnings and 6 times sales. Finally, analysts have a 12-month price target of $4,100 for BKNG, signaling upside of roughly 10%.
On the date of publication, Tezcan Gecgil 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.
