In this article, we will discuss 12 Most Undervalued Travel Stocks to Buy According to Hedge Funds
The travel industry has rapidly evolved, with the leading businesses witnessing healthy growth and strong profit margins. The shift in source markets and destinations, increased demand for experiential and luxury travel, together with innovative business strategies continue to dramatically alter the industry landscape. Much of the travel demand is close to home. As per McKinsey, globally, domestic travel should grow ~3% annually, touching 19 billion lodging nights per year by 2030.
This is particularly true for the US, the world’s largest travel market. Around 68% of trips initiated in the US are to destinations within the country. Despite inflation and record costs weighing over Americans’ travel budgets, most of them will continue to travel. Most American consumers rank travel, domestic and international, as their “highest-priority” areas when it comes to discretionary spending.
Rise of Experiential Travel
Travel experts believe that there has been a growing focus on experiences as compared to material goods.
The demand for experiential travel should continue to rise heading into 2025 because consumers are prioritizing unique and memorable encounters over traditional travel consumption. This shift cannot be tagged as a passing trend, but it’s transforming the global tourism landscape. McKinsey believes that the experiential travel market should exceed ~$3 trillion by 2025. The growth should primarily be seen off the back of an increasing share of consumer spending on experiences like entertainment, adventure travel, and personalized excursions.
WNS believes that ~87% of the people globally agree that having a trip booked in the future provides them something to look forward to. With the pent-up demand unleashing, the upcoming 5 years are expected to see elevated expectations among travelers as they plan to make up for the lost time. Despite a bumpy ride for 4 years, the international tourist arrivals should touch pre-pandemic levels in 2024. However, inflationary concerns, climate change, and geopolitical tensions might keep the sector in a difficult spot.
Some countries and governments have done a better job in minimizing such risks and maximizing travel and tourism potential as per the Travel & Tourism Development Index 2024, published last month by the World Economic Forum.
What Are the Trends Shaping for Travel Sector?
As per the United Nations World Tourism Organization (UNWTO), international tourism should fully recover to pre-pandemic levels in 2024. UNWTO expects that there is still a significant headroom for recovery across Asia. Chinese outbound and inbound tourism should ramp up in 2024 as a result of visa facilitation and improved air capacity.
Total international arrivals are expected to significantly increase over the upcoming 2 years and will surpass pre-pandemic 2019 visitation in 2025 (as per the International Trade Administration). Total international arrivals should see an increase of 16.8% to 77.7 million in 2024, 9.7% to 85.2 million in 2025, and an increase of 7.0% to 91.1 million in 2026.
Since the bulk of travel spending remains close to home, McKinsey mentioned that 75% of travel spend is domestic. The US has been tagged as the world’s largest domestic travel market, with China well-placed to overtake it in the coming years. New markets like India, Southeast Asia, and Eastern Europe are the growing sources of outbound tourism. The travel spending of Indians should grow by 9% per year between now and 2030, with annual growth projections for Southeast Asians and Eastern Europeans coming at ~7% for both. Just like the launch of a jet engine significantly reduced travel times, AI continues to change the fundamentals of the travel industry.
As per estimates by McKinsey Digital, companies that holistically address digital and analytics opportunities can experience an earnings improvement of up to ~25%.
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Our methodology
To list the 12 Most Undervalued Travel Stocks to Buy According to Hedge Funds, we used a Finviz screener to filter the stocks catering to the relevant industries and also looked into travel ETFs and online rankings. We gathered a list of 20 stocks and then narrowed our list to stocks that were trading at less than the forward earnings multiple of ~22.56x (since the broader market trades at ~22.56x). Finally, we ranked the stocks in ascending order of the number of hedge funds that have stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12 Most Undervalued Travel Stocks to Buy According to Hedge Funds
12) Monarch Casino & Resort, Inc. (NASDAQ:MCRI)
Forward P/E Ratio as of 13 September: 15.50x
Number of Hedge Funds: 14
Monarch Casino & Resort, Inc. (NASDAQ:MCRI), with the help of its wholly-owned subsidiary, owns and operates the tropically-themed casino resort in Reno, Nevada.
Industry veterans believe that Monarch Casino & Resort, Inc. (NASDAQ:MCRI) is well-positioned to see strong growth as a result of its several competitive advantages. These include convenient locations and a focus on customer service. The company is in strong markets with opportunities to expand the top line. Its well-crafted entertainment options, and luxurious accommodations, together with its customer-centric approach should continue to act as pillars in fortifying its position in the broader industry.
Strategic expansions into untapped markets or the launch of new services are expected to fuel growth and revenue streams for the company. Recently, International Game Technology PLC (NYSE:IGT) has partnered with Monarch Casino & Resort, Inc. (NASDAQ:MCRI). As part of this collaboration, Monarch Casino & Resort, Inc. (NASDAQ:MCRI) rolled out a mobile sportsbook app, Atlantis NV Sports, which uses IGT PlaySports technology. This technology stack is regarded as one of the most versatile B2B sports betting technology stacks in the US. With this collaboration, Monarch Casino & Resort, Inc. (NASDAQ:MCRI) now has an ideal sports betting offering that will drive incremental player engagement.
Its competitive advantage is derived from its product offerings, and the personalized experiences the company crafts for its guests. The company released its 2Q 2024 financial results, with a continued focus on operational efficiency leading to an improvement in the adjusted EBITDA margin to 34.3% from 34.1% in the same period of the previous year.
In 2Q 2024, there were 14 hedge funds that held positions in the stock with total stakes amounting to $39.4 million.
11) Hilton Grand Vacations Inc. (NYSE:HGV)
Forward P/E Ratio as of 13 September: 11.44x
Number of Hedge Funds: 27
Hilton Grand Vacations Inc. (NYSE:HGV) develops, markets, and manages timeshare resorts. It provides vacation ownership intervals and manages resorts located in leisure and urban destinations.
Hilton Grand Vacations Inc. (NYSE:HGV) is expected to benefit from a favorable competitive position as one of the largest timeshare operators along with its healthy profitability and cash flow profile. The company enjoys economies of scale and enables third-party marketing relationships which should help it in achieving revenues and earnings growth.
Hilton Grand Vacations Inc. (NYSE:HGV) appears to be well-placed in the high-end spectrum of the timeshare industry and it possesses a diversified portfolio of vacation ownership brands. Its long-term growth trajectory is further supported by the integration of Diamond Resorts. This broadens Hilton Grand Vacations Inc. (NYSE:HGV)’s addressable market via an expanded regional network in the US and a broad range of products and price points.
The company enjoys exclusive rights to the “Hilton” name for the timeshare business on a 100-year license. It also has access to ~195 million members who are part of the Hilton Honors program, which has been tagged as one of the sector’s strongest loyalty programs. These loyalty programs are of utmost importance for such chains, as they drive repeat business, resulting in repeat selling opportunities.
As per Wall Street analysts, the average price target on the shares of Hilton Grand Vacations Inc. (NYSE:HGV) stood at $45.20. As per Insider Monkey’s database, 27 hedge funds reported owning stakes in the company.
Laughing Water Capital, an investment management company, released its second-quarter 2024 investor letter and mentioned Hilton Grand Vacations Inc. (NYSE:HGV). Here is what the fund said:
“Hilton Grand Vacations Inc. (NYSE:HGV) – I estimate that HGV, our time share business, is trading at a ~25% free cash flow yield and buying back ~10% of its market cap annually. This is a formula that will eventually work very well, unless people decide to stop going on vacation.”
10) Tripadvisor, Inc. (NASDAQ:TRIP)
Forward P/E Ratio as of 13 September: 8.82x
Number of Hedge Funds: 37
Tripadvisor, Inc. (NASDAQ:TRIP) operates as an online travel research company. It provides travel information, reviews, and opinions of members regarding destinations and accommodations, which includes hotels, bed and breakfasts, specialty lodging, and other activities.
Market experts believe that Tripadvisor, Inc. (NASDAQ:TRIP) remains well-placed to navigate the evolving landscape of online travel and restaurant reservations. Therefore, the company continues to focus on exploiting increased consumer activity in the post-pandemic era. Moreover, the company has a large, growing, and highly engaged network. This helps in creating a substantial barrier to competition.
Tripadvisor, Inc. (NASDAQ:TRIP) has been successful in building a strong platform for non-hotel reviews that focuses on restaurants and attractions. Therefore, the company creates a significant amount of value for the hotel channel, which it might capture financially. Nearly a decade ago, the company acquired a platform called Viator. The market players are now turning optimistic about Viator. They believe that Viator’s surging adoption provides Tripadvisor, Inc. (NASDAQ:TRIP) an underappreciated growth engine for the long term. The company continues to invest in its brand, product, and repeat bookings to drive LTV and improvements in unit economics.
In 2Q 2024, the company delivered revenue of $497 million and adjusted EBITDA of $97 million, or 20% of revenue. Tripadvisor, Inc. (NASDAQ:TRIP) delivered value via product innovation, and marketing efficiency, together with day-to-day execution. These measures are expected to drive long-term sustainable growth in revenue and profit as it builds a durable position throughout travel and experiences.
Analysts at Wedbush reaffirmed its “Neutral” rating and gave a price target of $21.00 on the shares of Tripadvisor, Inc. (NASDAQ:TRIP) on 7th August. Tripadvisor, Inc. (NASDAQ:TRIP) was a part of 37 hedge fund portfolios at the end of Q2 2024, compared with 36 in the previous quarter, according to Insider Monkey’s database.
9) Las Vegas Sands Corp. (NYSE:LVS)
Forward P/E Ratio as of 13 September: 13.77x
Number of Hedge Funds: 40
Las Vegas Sands Corp. (NYSE:LVS) provides a wide range of gaming activities and overnight accommodations, and the company’s expo centers host a wide range of expositions and other activities.
Wall Street analysts believe that Las Vegas Sands Corp. (NYSE:LVS)’s Macao resorts should see strong revenue growth in 2024 as China lifted COVID-19 restrictions in January last year. The company and the Macao gaming enclave appear to be well-placed for long-term growth. Apart from holding a dominant mass and non-gaming position on Cotai Strip in Macao, market experts believe that Las Vegas Sands Corp. (NYSE:LVS) will reinvest into assets in the region. Finally, this should help strengthen its brand locally.
Las Vegas Sands Corp. (NYSE:LVS)’s ongoing expansion projects should help in enhancing offerings and attract customers. The completion of the MBS Expansion Project together with the renovation of The Londoner Macao should launch new luxury accommodations and entertainment options. Over the long term, such projects should drive future revenue growth and further strengthen its market leadership. While the company is expected to benefit from the booming resorts and casino business, its solid financial position, and stable cash flows should continue to support its spending plans in Macao and Singapore, targeting new opportunities for growth and shareholder value.
In its 2Q 2024 results, the company stated that, in Singapore, Marina Bay Sands posted strong financial and operating performance. Las Vegas Sands Corp. (NYSE:LVS)’s new suite product and elevated service offerings place it for additional growth, with travel and tourism spending in Asia witnessing an increase.
As per Wall Street analysts, the shares of Las Vegas Sands Corp. (NYSE:LVS) have an average price target is $52.75. As per Insider Monkey’s data, 40 hedge funds were long Las Vegas Sands Corp. (NYSE:LVS).
8) MGM Resorts International (NYSE:MGM)
Forward P/E Ratio as of 13 September: 12.14x
Number of Hedge Funds: 44
MGM Resorts International (NYSE:MGM) operates gaming, hospitality, and entertainment resorts. The company provides accommodation, dining, meetings, and other travel-related services.
Wall Street analysts opine that MGM Resorts International (NYSE:MGM) appears to be well-placed to achieve strong growth given its scale, healthy competitive position, and diversification in Las Vegas and regional markets. The continued rebound in Macau for both of the company’s properties is expected to fuel growth over the near term.
MGM Resorts International (NYSE:MGM)’s stronghold on the Las Vegas Strip exhibits strong brand equity and market dominance. With around one-fourth of all units in the market, the company’s properties like MGM Grand, Mandalay Bay, and Bellagio are expected to serve as luxury landmarks. This dominant position can result in getting a high volume of visitors and maintaining a significant market share. Given its brand’s reputation, the company can charge premium pricing, which should help its revenue growth moving forward.
MGM Resorts International (NYSE:MGM) continues to focus on inorganic growth opportunities as its strategic investments in digital capabilities continue to make up a competitive advantage. The recent acquisition of LeoVegas and 50% ownership in BetMGM, LLC exhibit its focus on expanding its online gaming footprint. These digital ventures should also further diversify its revenue sources.
Analysts at Susquehanna upped their price target on shares of MGM Resorts International (NYSE:MGM) from $54.00 to $55.00. They gave a “Positive” rating on 1st August. Insider Monkey’s 2Q 2024 data revealed that 44 hedge funds are holding MGM Resorts International (NYSE:MGM).
Longleaf Partners released its fourth quarter 2023 investor letter and mentioned about MGM Resorts International (NYSE:MGM). Here is what the fund said:
“MGM Resorts International (NYSE:MGM) & Hyatt – Hospitality companies MGM Resorts and Hyatt were both strong performers in the fourth quarter and for the year, outperforming expectations that the post-COVID travel rebound would ease in 2023. Casino and online gaming company MGM saw double-digit revenue growth and strong 2023 bookings in Las Vegas in the first half, which moderated in the second half but remained solid. A cybersecurity attack negatively impacted 3Q results, but MGM does not expect the $100 million hit to have a material effect on its financial condition and operational results for the year. MGM bought back discounted shares at a 15% annualized rate and authorized another $2 billion buyback in 4Q, which represents another 15% of the company.”
7) Royal Caribbean Cruises Ltd. (NYSE:RCL)
Forward P/E Ratio as of 13 September: 12.72x
Number of Hedge Funds: 48
Royal Caribbean Cruises Ltd. (NYSE:RCL) operates as a global cruise company, which operates a fleet of vessels in the cruise vacation industry.
Wall Street analysts believe that consumer interest in travel maintained momentum for Royal Caribbean Cruises Ltd. (NYSE:RCL), resulting in robust demand and pricing (ahead of 2019 levels) at its business. Given the healthy advance booking patterns, the company is expected to report record pricing moving forward. Coming to the cost side of things, market experts opine that expenses will be better managed, with occupancy well-positioned to return to historical levels for 2024, driving profitability.
The company’s 2Q 2024 results were aided by stronger-than-anticipated consumer demand, robust onboard spending, strong pricing momentum, and solid cost containment measures. Royal Caribbean Cruises Ltd. (NYSE:RCL) continues to benefit from numerous new mega-ships, and more island destinations, together with re-entry into the Chinese market.
Royal Caribbean Cruises Ltd. (NYSE:RCL) released second-quarter EPS of $3.11 and adjusted EPS of $3.21. These results were better than its guidance as a result of stronger pricing on close-in demand, strength in its onboard revenue, and favorable timing of expenses of ~$0.15. Due to continued robust demand for vacation experiences, the company increased its FY 2024 adjusted EPS guidance to $11.35 – $11.45, or 68% YoY growth.
The company has seen exceptional demand for its vacation experiences, which supported its performance by posting significant yield growth over the past few years. Tigress Financial upped its target price on the shares of Royal Caribbean Cruises Ltd. (NYSE:RCL) from $155.00 to $210.00, giving the stock a “Buy” rating on 2nd August. Notably, 48 hedge funds held stakes in the company at the end of 2Q 2024, as per Insider Monkey’s database.
Ariel Investments, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Global cruise vacation company, Royal Caribbean Cruises Ltd. (NYSE:RCL), advanced on another quarterly earnings beat and subsequent raise in full-year guidance. Stronger than anticipated consumer demand, healthy onboard spend, robust pricing and solid cost containment lifted recent results. Additionally, RCL is benefitting from several new megaships, more island destinations and re-entry into the China market. The resiliency of the core cruise consumer, in combination with management’s superior operational expertise and revised earnings outlook, lays the foundation for RCL to exceed its three-year strategic imperative, the Trifecta Program, a year earlier than expected.”
6) Trip.com Group Limited (NASDAQ:TCOM)
Forward P/E Ratio as of 13 September: 12.82x
Number of Hedge Funds: 52
Trip.com Group Limited (NASDAQ:TCOM) offers online travel agency services. It provides mobile applications, hotel reservations, flight ticketing, corporate travel management, and train ticketing services.
Trip.com Group Limited (NASDAQ:TCOM) has been generating revenue from advertisement, and it plans to capture ~3%-5% of the ad market. The number of Chinese passport holders sits at only ~10%-15% of the population. Therefore, the company has secular demand given the low saturation. Moving forward, the company’s market share should further be enhanced by effective execution, improvements in the supply chain, enriched content offerings, and strong service quality.
Trip.com (NASDAQ:TCOM) should continue to benefit from China’s restrictive internet service regulations which pose restrictions to international competitors. It is a well-known brand in China and is focused on improving its international operations. Trip.com Group Limited (NASDAQ:TCOM)’s extensive connections in the travel ecosystem enable it to acquire new travelers by incurring minimal advertising costs. This supports the company’s margins.
In 2Q 2024, Trip.com Group Limited (NASDAQ:TCOM) saw continued growth as a result of strong travel demand, primarily for cross-border travel. Its strong performance exhibits its adaptability in a dynamic market. Its net revenue came in at RMB12.8 billion (US$1.8 billion), which represents a rise of 14% YoY. Sequentially, net revenue grew by 7% as a result of stronger travel demand, particularly during the holiday periods.
Barclays increased their price target on shares of Trip.com Group Limited (NASDAQ:TCOM) from $60.00 to $76.00, giving it an “Overweight” rating on 22nd May. As per Insider Monkey’s data, 52 hedge funds reported owning stakes in Trip.com (NASDAQ:TCOM).
5) Carnival Corporation & plc (NYSE:CCL)
Forward P/E Ratio as of 13 September: 10.79x
Number of Hedge Funds: 53
Carnival Corporation & plc (NYSE:CCL) owns and operates cruise ships providing cruises to all major vacation destinations such as North America, United Kingdom, Germany, Southern Europe, and Asia Pacific. The company also owns and operates hotels and lodges.
The market experts believe that Carnival Corporation & plc (NYSE:CCL) should see strong revenue and earnings growth from 3 sources. These include scalability, brand intangible assets, and cost advantage. The growth measures are well-supported by the pricing power and scale advantages. As the company focuses on optimizing occupancy, passenger counts and yields are expected to rise at a faster pace than analysts’ expectations.
With European demand and occupancy profiles converging on normalized levels, Carnival Corporation & plc (NYSE:CCL)’s economic performance is expected to improve. The company’s 2Q 2024 results exhibit that consumer appetite for travel remains strong. Also, there has been continued demand, with North America, Australia, and Europe segment booking prices being ahead of 2023 for the upcoming 2 quarters and into 2025.
In 2Q 2024, the company’s net income saw an improvement of ~$500 million as compared to 2023, with adjusted net income outperforming March guidance by ~$170 million. Carnival Corporation & plc (NYSE:CCL) made significant strides in improving its commercial operations, tactically reallocating its portfolio composition, and formulating growth plans.
Given the continued strong demand trends, Carnival Corporation & plc (NYSE:CCL) raised its expectations for the year, with net yields expected to top 10%, propelling the company for double-digit returns on invested capital.
Bank of America upped their target price on the shares of Carnival Corporation & plc (NYSE:CCL) from $23.00 to $24.00, giving it a “Buy” rating on 27th June.
4) Marriott International, Inc. (NASDAQ:MAR)
Forward P/E Ratio as of 13 September: 20.92x
Number of Hedge Funds: 54
Marriott International, Inc. (NASDAQ:MAR) owns and operates hotels and motels. It provides hotel accommodations, luxury suites, car rental, recreational facilities, and other travel-related amenities.
Wall Street analysts believe that Marriott International, Inc. (NASDAQ:MAR) should see strong revenue and earnings growth given its industry-leading brand intangible together with switching cost advantages, which have been further expanded in comparison to the industry and peers. These competitive advantages were strengthened by its portfolio scale, management expertise, strong loyalty program, and expansion into adjacent verticals.
The recent 2023 launches of the Spark and StudioRes brands extend the company’s reach into the midscale and extended-stay segments. Apart from this, these launches can add several hundred hotels over the upcoming several years.
Marriott International, Inc. (NASDAQ:MAR)’s acquisition of Starwood (wrapped up in September 2016) and its partnership with MGM’s Vegas portfolio strengthened the company’s long-term brand advantage. This is because Starwood’s luxury portfolio and MGM’s strong presence in the gaming mecca complement Marriott International, Inc. (NASDAQ:MAR)’s dominant position in North America.
Analysts at Barclays increased their price target on shares of Marriott International, Inc. (NASDAQ:MAR) from $240.00 to $251.00, giving it an “Equal-weight” rating on 17th July. Overall, 54 hedge funds held stakes in Marriott International, Inc. (NASDAQ:MAR) in the second quarter, with positions worth $2.12 billion.
3) Expedia Group, Inc. (NASDAQ:EXPE)
Forward P/E Ratio as of 13 September: 8.70x
Number of Hedge Funds: 56
Expedia Group, Inc. (NASDAQ:EXPE) provides online travel services for leisure and small business travelers. It provides a wide range of travel shopping and reservation services.
In addition to new travel trends, Expedia Group, Inc. (NASDAQ:EXPE) should continue to benefit from the remote working trend. Wall Street analysts believe that worker flexibility will increase the long-term travel demand. The company’s strong user base, on the back of its leading online travel network, should act as a key advantage that should persist over the next decade, despite challenges from supplier consolidation in the US.
Expedia Group, Inc. (NASDAQ:EXPE)’s ongoing push for the expansion of its international presence should further strengthen the network advantage over time. Expedia Group, Inc. (NASDAQ:EXPE) continues to leverage its AI capabilities, which should also act as a growth enabler.
It embraced the transformative power of AI, with the introduction of more than 40 new AI-powered products and features. These have been designed to offer a more personalized experience for travellers.
The company’s 2Q 2024 results came in at the high end of its expectations as gross bookings and revenue grew 6%. It saw sequential improvement in its consumer brands. Expedia Group, Inc. (NASDAQ:EXPE)’s merchant revenue increased in 2Q 2024 on a YoY basis mainly because of an increase in merchant hotel revenue. The company’s revenues from “advertising, media, and other” increased as a result of an increase in Expedia Media Solutions’ advertising revenue.
Analysts at Cantor Fitzgerald started coverage on the shares of Expedia Group, Inc. (NASDAQ:EXPE) on 5th September. They gave a “Neutral” rating and a price target of $130.00. At the end of 2Q 2024, 56 hedge funds in Insider Monkey’s database held stakes in Expedia Group, Inc. (NASDAQ:EXPE).
Artisan Partners, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Expedia Group, Inc. (NASDAQ:EXPE) shares declined 18% during the quarter after reducing its full-year outlook. It lowered its revenue growth forecast to mid- to high-single digits for 2024 and said margins will stay flat. On the surface, a business growing in the high-single digits while maintaining profitability isn’t bad. The issue is the company just completed a major restructuring that was supposed to result in accelerated revenue growth and significant margin expansion. Neither is happening. The company continues to underperform the industry and its peers. Importantly, management will not share with us the important metrics and disclosures that might give us the ability to understand why. It continues to just tell us that improvement is coming. That is not enough for us, and we have lost confidence that the changes will have the intended impact on the company’s financial performance. As a result, we decided to exit the investment at a modest profit.”
2) The Walt Disney Company (NYSE:DIS)
Forward P/E Ratio as of 13 September: 16.98x
Number of Hedge Funds: 92
The Walt Disney Company (NYSE:DIS) has theme parks and hotels which are categorized as the world’s premier vacation destinations. Its cruise ships remain popular and provide family-themed voyages.
Wall Street analysts believe that the company’s ownership of timeless characters and franchises, together with its ability to create and attract top-tier content should act as critical tailwinds. In the long term, considering the company’s market share and industry-leading characters, market experts believe that consumers should return to its movies, parks, and merchandise.
Moving forward, The Walt Disney Company (NYSE:DIS) plans to make robust investments in the United Kingdom and continental Europe. These should focus on producing movies and television shows for the big screen and streaming platform, Disney+.
Recently, Disney Cruise Line announced an order for 4 ships, which are expected to be delivered between 2027 and 2031. These are in addition to the 4 additional vessels which are already set to make a debut. Therefore, in the next 7 years, these eight vessels are expected to more than double the company’s 5-ship fleet. It seems that The Walt Disney Company (NYSE:DIS) has been betting big on its vacation-at-sea business. Amidst record bookings and demands across 2024, the company plans to exploit the market opportunity.
Since the cruise ships have the ability to pay back very quickly, the company remains optimistic about its investments in this business. The company has seen healthy demand in its cruise arm, with onboard spending witnessing an increase across the summer months.
As per Wall Street analysts, the average price target on the shares of The Walt Disney Company (NYSE:DIS) stood at $118.17. In 2Q 2024, 92 hedge funds held positions in the stock.
Mar Vista Investment Partners, LLC, an investment management company, released second quarter 2024 investor letter. Here is what the fund said:
“The Walt Disney Company’s (NYSE:DIS) shares declined after its earnings release, even though the company exceeded recently upgraded financial forecasts. While Disney+ and Hulu reached a milestone by turning their first quarterly profit, the company cautioned about theme park attendance returning to pre-pandemic norms. This signals a deceleration following a period of exceptional growth, impacting the stock as theme parks and experiences account for roughly 60% of Disney’s earnings. Despite broader consumer worries, Disney’s stock is still trading with a significant discount to fair value. We expect the gap between Disney’s market price and its intrinsic value to shrink as its streaming division evolves and increases profitability over time.”
1) Booking Holdings Inc. (NASDAQ:BKNG)
Forward P/E Ratio as of 13 September: 19.23x
Number of Hedge Funds: 96
Booking Holdings Inc. (NASDAQ:BKNG) operates as an online travel company. It offers a platform that allows travel reservations, accommodation reservations, rental cars, and vacation packages.
Booking Holdings Inc. (NASDAQ:BKNG)’s network advantage is the strongest in the industry, and the company has a focus on expanding its travel supply offerings. The company’s global online travel agency leadership position should increase over the next decade as a result of its healthy position in Asia-Pacific and leadership position in Europe. Also, the market share can further be strengthened through expansion in vacation rentals, restaurant bookings, flights, and payments. All these factors are supported by Booking Holdings Inc. (NASDAQ:BKNG)’s leading marketing and technology scale.
The company released its 2Q 2024 financial results, with total revenues coming at $5.9 billion, an increase of 7% as compared to the prior-year quarter (~9% rise on a constant-currency basis). The merchant revenues saw an increase while agency revenues declined in 2Q 2024 on a YoY basis because of the ongoing shift from agency revenues to merchant revenues at Booking.com.
Advertising and other revenues increased due to growth in advertising revenues at Booking.com and growth at OpenTable. Booking Holdings Inc. (NASDAQ:BKNG) remains well-positioned for continued growth as a result of a shift in traveller preferences and the company’s ability to adapt to the evolving market. The company’s diverse service offerings are expanding, with a focus on integrating AI and technology playing a critical role in this growth.
Analysts at Royal Bank of Canada initiated coverage on the shares of Booking Holdings Inc. (NASDAQ:BKNG) and restated an “Outperform” rating, giving a price target of $3,900.00 on 5th August. As per Insider Monkey’s 2Q 2024 data, Booking Holdings Inc. (NASDAQ:BKNG) was in the portfolios of 96 hedge funds.
Wedgewood Partners, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Booking Holdings Inc. (NASDAQ:BKNG) contributed to performance as travel spending across the U.S. and Europe remains quite healthy, whereas the Company took share in alternative accommodations, and looks set to expand margins after a few years of reinvestment. The Company has also been aggressively reducing its share count at reasonably attractive valuation multiples. Booking should be able to compound earnings at an attractive, double-digit rate for the next few years given these various initiatives.”
While we acknowledge the potential of BKNG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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