In this article, we discuss the 11 best travel stocks to buy right now. If you want to read about some more travel stocks, go directly to 5 Best Travel Stocks To Buy Right Now.
The travel industry has had a topsy-turvy start to 2022 as the global demand for travel booms compared to early 2021 but pressures from the Russian invasion of Ukraine and rising COVID-19 cases in China weigh on recoveries. According to a report by the World Tourism Organization, the global international tourist arrivals more than doubled in January 2022 compared to January 2021. The increase, 18 million more visitors, was more than the increase for the whole of 2021. International arrivals still remain 67% below pre-pandemic levels.
This indicates that travel firms like The Walt Disney Company (NYSE:DIS), Booking Holdings Inc. (NASDAQ:BKNG), and Airbnb, Inc. (NASDAQ:ABNB) have lots of room to climb higher in the coming months as the summer vacation season approaches. A survey by research firm Deloitte has found that four in ten American citizens plan a return to travel and vacation in the coming months. The World Travel and Tourism Council (WTTC) has also forecast that global travel will return to pre-pandemic levels by 2023.
In a report, the WTTC predicted that the global travel and tourism industry will post an annual average growth rate of 5.8% between 2022 and 2032, comparing favorably to the 2.7% increase in global GDP during the period. The industry will also create more than 126 million jobs during this boom, per the travel body. Julia Simpson, the head of WTTC, has called on governments across the world to reopen their borders and expects the global travel sector to register a “stellar” recovery in the coming months.
Our Methodology
The companies that operate in the travel sector and are best positioned to gain from the recovery travel boom were selected for the list. The business fundamentals and analyst ratings of these firms are also discussed to provide further context. Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey was used to quantify the hedge fund sentiment around each stock.
Photo by sabina fratila on Unsplash
Best Travel Stocks To Buy Right Now
11. Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 29
Wynn Resorts, Limited (NASDAQ:WYNN) develops and operates integrated resorts. The stock has gained in the past few days as COVID-19 cases outside of quarantine zones fall. This has brightened hopes of a recovery boom for the Macau gambling industry as well. The Labor Day weekend in China is being seen as a potential catalyst for the shares even though it is expected that the revenue recovery for resorts and gambling firms will stretch beyond the weekend due to pandemic restrictions.
On April 1, Citi analyst George Choi upgraded Wynn Resorts, Limited (NASDAQ:WYNN) stock to Buy from Neutral with a price target of $96.50, noting that pent-up demand in Macau would drive the earnings for the firm to as much as 80% pre-COVID levels.
At the end of the fourth quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $260 million in Wynn Resorts, Limited (NASDAQ:WYNN), compared to 32 in the previous quarter worth $282 million.
Just like The Walt Disney Company (NYSE:DIS), Booking Holdings Inc. (NASDAQ:BKNG), and Airbnb, Inc. (NASDAQ:ABNB), Wynn Resorts, Limited (NASDAQ:WYNN) is one of the stocks that elite investors are flocking to as travel demand surges.
In its Q3 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Wynn Resorts, Limited (NASDAQ:WYNN) was one of them. Here is what the fund said:
“In the most recent quarter, we exited the Fund’s holdings in Wynn Resorts, Limited (NASDAQ:WYNN) due to: (i) ongoing COVID-19-related travel restrictions in China, Macau, and Singapore; and (ii) the Macau government’s announcement to tighten its casino regulatory oversight.”
10. Darden Restaurants, Inc. (NYSE:DRI)
Number of Hedge Fund Holders: 30
Darden Restaurants, Inc. (NYSE:DRI) owns and runs full-service restaurants. The company has an impressive dividend history stretching back more than two decades. It has consistently paid a dividend to shareholders for the past 26 years. On March 24, the firm declared a quarterly dividend of $1.10 per share, in line with previous. The forward yield was 3.36%. The firm posted earnings for the third fiscal quarter on March 24 as well, reporting a revenue of $2.4 billion, up more than 41% year-on-year.
On April 12, Citi analyst Jon Tower initiated coverage of Darden Restaurants, Inc. (NYSE:DRI) stock with a Buy rating and a price target of $162, underlining that the firm had some of the best buffers to protect profits and stoke traffic that were not reflected in the share price.
At the end of the fourth quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $401 million in Darden Restaurants, Inc. (NYSE:DRI), up from 25 in the previous quarter worth $337 million.
9. Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 33
Carnival Corporation & plc (NYSE:CCL) is a leisure travel firm. On April 4, the company reported that the week between March 28 and April 3 was the busiest booking week in the history of the firm. The company claimed that there was a double-digit increase from the previous record week’s booking total. In early April, 22 of its 23 ships operated by Carnival were already back in guest operations. The remaining is likely to return to service in early May. The shares of the firm climbed close to 3% after the firm disclosed the record bookings.
On April 26, Stifel analyst Steven Wieczynski maintained a Buy rating on Carnival Corporation & plc (NYSE:CCL) stock with a price target of $30, noting that the CEO transition for the firm would prove to be a growth catalyst for the stock in the coming months.
At the end of the fourth quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $470 million in Carnival Corporation & plc (NYSE:CCL), compared to 36 in the previous quarter worth $520 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Carnival Corporation & plc (NYSE:CCL) was one of them. Here is what the fund said:
“Several of our better performers in the first quarter were purchased while their business models were under stress from COVID restrictions or the macro environment the pandemic created. What gave us confidence in purchasing Carnival Corporation & plc (NYSE:CCL) was the actions the company took to extend out their balance sheets until travel resumed. Both should benefit as a broader vaccination rollout prompts cruise lines to resume operations and consumers to start traveling again and are positioned to deliver better margins and gain pricing power as the economy normalizes due to the cost controls implemented during the downturn.”
8. Southwest Airlines Co. (NYSE:LUV)
Number of Hedge Fund Holders: 38
Southwest Airlines Co. (NYSE:LUV) is a passenger airline firm. The firm posted earnings for the first quarter of 2022 on April 28, reporting a revenue of $4.6 billion, up over 128% year-on-year and beating estimates by $20 million. Bob Jordan, the CEO of the firm, said during the earnings call that the company expected to be solidly profitable for the remaining three quarters of this year as well. Jordan was confident that the company would continue to surprise analysts despite higher than average fuel prices weighing on costs.
On April 29, Raymond James analyst Savanthi Syth kept an Outperform rating on Southwest Airlines Co. (NYSE:LUV) stock and raised the price target to $57 from $54, highlighting that the firm had a “best-in-class” balance sheet.
At the end of the fourth quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $682 million in Southwest Airlines Co. (NYSE:LUV), compared to 39 in the previous quarter worth $729 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Southwest Airlines Co. (NYSE:LUV) was one of them. Here is what the fund said:
“One of our goals as we constantly monitor the portfolio is to see if we can better deploy capital by lowering the probability of being wrong. This motivation drove our swap of Delta Airlines into Southwest Airlines Co. (NYSE:LUV) during the quarter. We expect a huge rebound in airline traffic as COVID-19 concerns abate, but we are much more comfortable that it will be led by leisure travel. Conversely, we are more uncertain of the ultimate level and timing of business travel demand. Southwest Airlines Co. (NYSE:LUV), with its simple fare strategy and high leisure travel exposure, is better positioned to capture the ongoing traffic rebound without having to answer the business travel demand question on which Delta is more dependent. As a result, we expect Southwest to play serious offense as it gains share in the rebounding travel market and can fully leverage the massive pent-up demand for travel that we expect. In addition, the U.S. lead in vaccination over Europe favors Southwest over Delta, given the domestic focus of Southwest. COVID-19 has changed many things, but humans by their very nature like to move, and many of them will do it on Southwest.”
7. Royal Caribbean Group (NYSE:RCL)
Number of Hedge Fund Holders: 40
Royal Caribbean Group (NYSE:RCL) operates as a cruise company. As the pandemic restrictions wane, the company stands to benefit from the pent-up demand for travel and cruises. A trend towards higher prices in the industry is also likely to help the firm normalize operations after the pandemic panic of 2020. The firm is one of the largest cruise operators, running 62 ships that travel to around 1,000 destinations across the world. Before the virus, the firm had posted record revenues of $11 billion in 2019.
On March 29, Wells Fargo analyst Daniel Politzer initiated coverage of Royal Caribbean Group (NYSE:RCL) stock with an Overweight rating and a price target of $93, noting industry-leading technology, differentiated product offering, and itinerary optimization as some of the catalysts for the shares in the recovery period.
Among the funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Royal Caribbean Group (NYSE:RCL) with 5.3 million shares worth more than $413 million.
6. Marriott International, Inc. (NASDAQ:MAR)
Number of Hedge Fund Holders: 43
Marriott International, Inc. (NASDAQ:MAR) owns and runs hotels and resorts. On March 22, the firm announced that it had signed a deal with safari firm Baraka Lodges to enter the safari segment in Africa. The safari, expected to be complete by 2023, will be an addition to the more than 120 properties that the company already owns across the African continent. Another positive for the shares is that the firm recently beat market estimates on earnings per share and revenue for the fourth quarter of 2021 by $0.30 and $420 million respectively.
On February 16, Wells Fargo analyst Dori Kesten kept an Overweight rating on Marriott International, Inc. (NASDAQ:MAR) stock and raised the price target to $199 from $185, noting that exposure to higher-end properties bode well for the outsized growth for the stock.
At the end of the fourth quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $2.872 billion in Marriott International, Inc. (NASDAQ:MAR), up from 39 in the previous quarter worth $2.878 billion.
In addition to The Walt Disney Company (NYSE:DIS), Booking Holdings Inc. (NASDAQ:BKNG), and Airbnb, Inc. (NASDAQ:ABNB), Marriott International, Inc. (NASDAQ:MAR) is one of the stocks that hedge funds are buying as the travel industry takes off after the pandemic lows.
In its Q4 2021 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Marriott International, Inc. (NASDAQ:MAR) was one of them. Here is what the fund said:
“Marriott International, Inc. (NASDAQ:MAR) is the world’s largest hotel company followed closely by Hilton (HLT) and Intercontinental Hotels Group plc (IHG). The company owns a portfolio of brands from the low end (Courtyard, SpringHill Suites, Aloft), through the mid-tier (Marriott, Sheraton, Westin, Renaissance Hotels), to the luxury high end (JW Marriot, Ritz-Carlton, St. Regis). In total the company had 7,642 properties with over 1.4 million rooms as of the end of Q1 2021.
The majority (85%) of Marriott’s revenue comes from hotels in the United States, with the rest almost evenly split between Asia Pacific and Europe. Like it’s smaller peer, Hilton, the company today is almost exclusively a manager and franchisor of hotels, not a hotel owner. The company owns 66 hotels, manages 2,083 and franchises 5,493. Like all franchise-based businesses Marriott requires very little capital to grow as it utilizes the investment capital of its hotel-owners/partners to expand. Marriott International, Inc. (NASDAQ:MAR) currently faces a difficult operating environment due to the Covid-19 pandemic and uncertainty about the future of business travel. However, the company is an excellent operator with a somewhat leveraged capital structure (the company acquired Starwood Properties in late 2016) – if pent-up demand for travel materializes post-Covid, as we expect it will, the company will quickly go from losing money to raking in profits.”
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Disclosure. None. 11 Best Travel Stocks To Buy Right Now is originally published on Insider Monkey.
