Many people are finally getting back to traveling, and companies are cashing in on this by making globetrotting easier for all of us – while generating some profit. And as an investor, you too can possibly line your pockets by investing in travel stocks.
But with so many travel brands, it can be hard to know precisely which could be an excellent addition to your portfolio. As the true money (and travel) geeks we are, we’ve done some of the heavy lifting for you and rounded up our best picks in the travel sector. Read on to see why these eight stocks could be worth considering.
Why Invest in Travel Stocks?
Travel stocks were among the hardest hit back in 2020. Now that we’re safely on the other side of the global pandemic, we’re seeing a resurgence in travel as people set their sights on vacation plans.
The industry may still be recovering, but the demand for accommodations and air travel has finally returned to pre-Covid levels. A lot of travel stocks remain undervalued as companies work to catch back up, and the work required to climb out of that hole is creating tons of forward momentum at the same time.
Using the Dow Jones U.S. Travel & Tourism Total Stock Market Index as a baseline, travel stocks are up 45% from the beginning of the year. That’s especially impressive coming off the heels of some significant inflation. This aligns perfectly with travel and tourism revenue estimates, eclipsing $854 billion in 2023.
Many fads come and go with time, but travel is one of those things humanity has always done and will likely always do. How people go on vacation changes over time, but we’re optimistic about investing in the travel sector.
The Best Travel Stocks To Buy Now
Most travel niches are doing well right now, but that doesn’t mean every stock is a winner. We looked closely for companies with robust business models, well-grounded financials, and the positive momentum needed to go far. Here are our top picks for the best travel stocks to buy now.
Booking Holdings Inc. (NASDAQ: BKNG)
Booking Holdings traces its beginnings to 1997 and today is one of the world’s largest online travel agencies. Its signature site, Booking.com, has a massive reach with 28 million accommodations in 220 countries.
If that wasn’t enough, the company also owns OpenTable, Rentalcars.com, Agoda, Priceline, and KAYAK. Customers can get flights, a rental car, and a table for dinner without leaving Booking Holdings’ umbrella. Few other organizations can boast such a diverse set of tools.
The travel provider weathered the storms of 2020 well, making critical business decisions to maintain its free cash flow. That money provided the foundation Booking needed to recover lost income and surpass previous profit milestones quickly.
Today’s $2,776 share price reflects Booking Holdings’ business prowess, just a short drop from its recent all-time high. The company’s not resting on its laurels, though. Should trends continue, analysts predict the stock could hit $3,550 soon.
Delta Air Lines, Inc. (NYSE: DAL)
Forget the car; airlines are soaring high so far in 2023. Delta Air Lines is among the leaders enjoying the fruits of its labors.
Founded in 1924, Delta Air Lines is one of the oldest airlines. The company’s long and storied history has allowed it to learn and adapt to almost any situation.
In 2010, Delta merged with Northwest Airlines to become the world’s largest carrier. Strategic business moves helped stabilize the company while remaining competitive with its rivals.
Even the Covid pandemic didn’t slow the airline down for long. Its fleet comprises roughly 1,000 aircraft covering 4,000 routes to more than 280 destinations worldwide.
The company looks great on the financial side as well. Repeated increases in revenue and earnings per share bode well for longevity.
This might be the perfect time to add some DAL stock to your portfolio as shares rest in a slight lull. A 12-month $55 price target represents 70% growth from a current $31.89 valuation.
Airbnb (NASDAQ: ABNB)
Airbnb started in 2007 as two hosts welcoming three guests into a San Francisco home. It’s now home to more than four million hosts who have served an incredible 1.5 billion guests across the planet.
The site’s unique approach to accommodation puts much of the power in a homeowner’s hands, allowing people to open doors and rooms to travelers for profit. Other companies mimic this principle, but not with the same level of success.
Second-quarter earnings showed a huge leap from 2022’s numbers and continued the flow of excellent financials. This jives with an increase the company is seeing in long-term stays.
Airbnb’s global outlook is promising as well. The company is sliding into new markets in Asia and Latin America to boost revenue numbers even higher.
All this good news points to a potential 21% upside from its current $143.68 valuation, giving investors a reason to get excited.
Royal Caribbean Cruises Ltd. (NYSE: RCL)
Royal Caribbean set sail in 1969 and has been defining the cruise space ever since. The company consistently outdoes itself with successive classes of ships that take vacations to a new level.
In addition to its flagship Royal Caribbean vessels, the cruise provider owns and operates Celebrity Cruises and Silversea Cruises. It also holds a joint venture with lesser-known TUI and Hapag-Lloyd brands. Its global fleet travels to more than 1,000 destinations on every continent.
2020 was a rough year for cruise lines, and Royal Caribbean is one of many still recovering. That may sound bad news, but share prices are undervalued. Couple that with solid momentum and growth potential, leaving Royal Caribbean looking great.
A 36% jump in revenue from last year and a whopping 3,000% increase in net income further back up these claims. You may want to grab some shares now should RCL catch up to and pass its pre-Covid numbers.
Expedia Group (NASDAQ: EXPE)
Expedia is another trip-planning giant to make our list, and it’s here for good reason. It was one of the first to tap into AI and now uses the technology to make more than 600 billion predictions annually.
These predictions help Expedia market unique vacation suggestions for customers from over three million properties, 220,000 activities, and 500 modes of transportation. The goal is more bookings with less effort from folks wanting to get out into the world.
It doesn’t hurt that Expedia owns other popular brands such as Travelocity, Hotels.com, Vrbo, CheapTickets, and Hotwire. Trivago is the newest addition to this seemingly ever-growing list. All these expenses have not hurt Expedia’s cash flow, which has remained healthy for the last few years.
Share prices are down from 2022’s $210 highs, but this might be good news, considering the company has the momentum to regain lost ground. An investment now could yield positive results if we see good fall financials.
Ryanair Holdings plc (NASDAQ: RYAAY)
Ryanair Holdings is Europe’s largest airline group, widely known for budget fares. Based in Ireland, the company owns and operates Ryanair, Ryanair UK, Lauda, Buzz, and Malta Air.
Its fleet comprises 565 aircraft covering 3,000 daily flights to over 240 airports throughout Europe, northern Africa, and western Asia. By 2034, Ryanair expects to add another 300 Boeing 737s to its lineup. Such a move would boost total guest capacity by 21%.
Ryanair is also at the forefront of eco-friendly air travel. Its planes see less fuel burn and quieter noise emissions, keeping the airline ahead of ever-tightening European restrictions.
Stats from March show 169 million guests using the airline annually, which is already 20 million more than pre-Covid numbers. The increase has led to 40% higher revenue numbers year over year.
A solid financial standing and a clear path to more growth paint a pretty picture for Ryanair Holdings’ future.
MGM Resorts International (NYSE: MGM)
MGM Resorts International represents a global gaming and entertainment organization encompassing 31 unique destinations. Both national and international locations feature best-in-class hotels, casinos, performances, and extensive food and retail offerings.
Its origins date back to the early 1960s with the construction of the International Hotel in Las Vegas. The company built and acquired other properties over the years, notably absorbing the Mirage Resorts empire for $4.4 billion in 2000. MGM Resorts International also has a significant presence in China.
The rise of online betting led MGM to form a 50% joint venture and start BetMGM in 2018. It’s MGM’s exclusive sports betting division, operating both online and in casinos around the country. The site provided a much-needed income boost during the pandemic.
A continued desire for growth led MGM into the Asian market, where it was selected as a resort partner in Japan. If plans continue, the move could open MGM to an estimated 20 million additional visitors annually.
All signs point to MGM picking up additional revenue and having a bright future in multiple geographic markets.
The Walt Disney Company (NYSE: DIS)
Disney is a vacation destination with theme parks in six locations on three continents. The magic began in the 1920s as a cartoon studio before becoming the iconic travel spot it is today.
The company is also home to the Disney Cruise Line, offering an entirely different way to immerse yourself in Disney adventure. Six ships sail the seven seas with experiences for kids and adults.
We all know Disney’s entertainment potential doesn’t end there. It owns Pixar, Marvel Entertainment, Lucasfilm, ESPN, and Fox.
This diversity served Disney well during the pandemic when both theme parks and cruise lines were shut down. The entertainment giant’s three streaming platforms, Disney+, ESPN+, and Hulu, garnered a lot of revenue during those tough times.
Covid restrictions are long gone, and Disney can operate again at full capacity. We’re anticipating a turnaround after its most recent earnings report shows a rise in earnings and free cash flow.
Final Thoughts
Travel may be a constant, but that doesn’t mean travel stocks are immune to market turbulence or economic downturns. Finding stocks that go places no matter what’s happening worldwide is essential.
Popular airlines and online booking sites remain in the spotlight and look to have a long runway of growth in the future. That said, watch for red flags in earnings reports that could lead to a crash and burn.
As always, there are no guarantees on the stock market, so you should never invest more than you can afford to lose. Still, travel stocks like these could be part of a diverse strategy leading to financial stability.