The summer sun is blazing on Wall Street, and so is the desire to profit from stocks that could benefit from increased travel worldwide. According to the World Travel & Tourism Council (WTTC), 2024 is projected to be a record-breaking year for travel and tourism, contributing $11.1 trillion to the global economy.
Beyond the spotlight on large conglomerates, specific segments like booking platforms, recovering cruise operators, and leisure travel also offer ripe opportunities. With that information, investors can leverage three summer travel stocks to capitalize on the sizzling travel boom.
Expedia (EXPE)
First up on our list of summer travel stocks is the travel technology group Expedia (NASDAQ:EXPE). Its travel fare aggregators and metasearch engines cover everything from hotels and flights to vacation packages and car rentals. Many readers will be familiar with its brand portfolio, which includes Expedia, Hotels.com, Vrbo, Orbitz, Travelocity, and Trivago.
In the first quarter of 2024, Expedia reported a revenue increase of 8% year-over-year (YOY) to $2.9 billion. Total gross bookings rose 3% YOY to $30.2 billion, driven by 12% growth in hotel bookings. Adjusted EPS improved to 21 cents, up from a 20-cent loss last year, but full-year guidance was trimmed due to challenges at Vrbo, its vacation rental marketplace.
Despite lower guidance and a surprise CEO change weighing on the stock price, Expedia’s future looks bright amid strong travel trends. Analysts at CBRE Group (NYSE:CBRE) highlight favorable travel fundamentals and GDP growth, suggesting higher U.S. revenue per available room (RevPAR) later in 2024. Additionally, strategic partnerships like the one with Cathay Pacific Airways (OTCMKTS:CPCAY) for its travel booking platform, Cathay Holidays, underscore Expedia’s commitment to improving customer experience.
So far in 2024, EXPE stock has declined about 15%. The shares are trading at favorable valuation levels of 11 times forward earnings and 1.5 times sales. Analysts have a 12-month price target of $140.00 for EXPE stock, signaling an 8% upside potential from the current levels.
Norwegian Cruise Line (NCLH)
Next up among today’s top summer travel stocks, we explore Norwegian Cruise Line (NYSE:NCLH). This major cruise industry player operates three subsidiaries: Norwegian, Oceania, and Regent Seven Seas. With nearly 30 ships, it serves destinations worldwide, including Scandinavia, the Mediterranean, Alaska, and the Caribbean.
In May, Norwegian Cruise Line reported robust first quarter of 2024 results. Revenues grew 20% YOY to $2.2 billion. Record bookings and a strong 12-month forward book position drove higher pricing and occupancy levels. This turned a loss of $127.7 million into a net income of $69.5 million. Adjusted diluted EPS rose from a loss of 30 cents to 16 cents.
Recently, Norwegian has migrated its core shore-side operations to Amazon Web Services (AWS) to leverage AWS’s capabilities. Investors expect this step to better optimize operations and capitalize on the growing demand for cruise holidays. In fact, global cruise capacity is expected to increase by 10% from 2024 to 2028.
However, NCLH stock has dropped around 5% this year. The shares are changing hands at attractive valuations of 14 times forward price-to-earnings (P/E) and 0.9 times price-to-sales (P/S). Wall Street has a 12-month median price forecast of $20.14 for NCLH, suggesting a more than 7% potential upside.
Travel + Leisure (TNL)
Travel media brand Travel + Leisure (NYSE:TNL) concludes today’s exploration of summer travel stocks. A heavyweight in the membership and leisure travel industry, TNL has a diverse portfolio of nearly 20 resorts, travel clubs, and lifestyle travel brands. This network caters to various vacation styles and budgets, offering all-inclusive resorts under brands like Club Wyndham and vacation exchange programs with RCI.
In the first quarter of 2024, TNL saw a strong start with a 15% increase in tours, 28% growth in new owner tours, and volume per guest above $3,000. Revenue grew 4.2% YOY, reaching $916 million. Adjusted diluted EPS jumped 9% YOY to 97 cents. The Vacation Ownership segment saw a 6% rise in revenue, while the Travel and Membership Transaction segment contracted 4%.
Recently, Travel + Leisure announced a strategic marketing partnership with Allegiant Air (NASDAQ:ALGT), which has 15 million loyalty members. This move allows TNL and Allegiant to offer targeted promotions, potentially driving growth for both companies.
TNL shares have appreciated nearly 20% year-to-date, complemented by a generous 4.3% dividend yield. Currently trading at 8.3 times forward earnings and 0.9 times sales, the stock signals undervaluation. Finally, analysts forecast a 16% upside potential for TNL stock, with a 12-month median price target of $54.00.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
