In this article, we will discuss 13 Best Vacation Stocks to Buy Now
In early 2024, The World Travel & Tourism Council projected a strong year for travel & tourism, with the sector’s global economic contribution expected to touch an all-time high of $11.1 trillion. As per the global tourism body’s 2024 Economic Impact Research (EIR), travel & tourism should be able to contribute an additional $770 billion over its previous record. WTTC anticipates that ~142 countries, of the 185 analysed, are expected to outperform previous national records.
WTTC forecasts a strong future for the next decade, characterized by healthy growth and unmatched career opportunities. By 2034, the sector is expected to supercharge the global economy with a staggering $16 trillion, accounting for ~11.4% of the entire economic landscape.
Travel and Vacationing in 2024 and Beyond
In 2024, the travel sector continues to break boundaries. Mastercard Economics Institute expects that this momentum will continue, with consumers prioritizing meaningful experiences and earmarking more of their budgets to travel.
Apart from air travel, cruise vacationing saw extraordinary growth, outpacing 2019 records. Through 1Q 2024, the US travel story was characterized by contrasting outbound and inbound dynamics. By November 2022, the US travelers vacationing overseas (excluding Canada and Mexico) outpaced 2019 levels. As of March 2024, the US travel overseas stood at ~20% above that level.
In comparison, the visitor traffic arrivals in the US from abroad were ~6% below 2019 levels as of March 2024. At this pace, the Economics Institute estimated that foreign passenger traffic in the US is expected to surpass 2019 levels later in 2024.
As per the Conference Board survey of consumer attitudes and buying plans in the US, the data as of April 2024 demonstrates that around 1 in 5 of the survey respondents expect to travel internationally in the upcoming 6 months. This was the record high since the survey began in February 1967. During this similar time in 2020, only 1 in every 20 Americans wanted to travel.
Recent Trends in Vacations
A big trend for 2024 remains the preference for experiential traveling over traditional celebrations for achieving some milestones. A recent survey demonstrated that ~40% of respondents continue to plan vacations for celebrating milestone occasions in 2024. One major shift in travel trends is the concept of a journey as the final destination. While travelers are seeking rail journeys along with epic boat trips, some travelers are opting for extended stopovers in certain destinations. This helps in turning layovers into small vacations.
The Cruise Lines International Association expects that ~82% of those who have cruised are expected to cruise again. The vacation rental market has been pegged at US$99.6 billion in 2023 and should be able to compound at more than 3% between 2024 and 2032 (as per Global Market Insights). This is expected on the back of elevated demand from the younger generation as they seek unique and authentic travel experiences. Notably, millennials and Gen Z are prioritizing experiences rather than material possessions, resulting in an increased demand for engaging and authentic travel.
Therefore, growth in the vacation rental market should stem from the increased use of online booking platforms, advancements in AI-driven property management technology, and the adoption of remote working.
Aerial view of an oceanfront vacation resort, reflecting the company’s ownership features.
Our methodology
To list the 13 Best Vacation Stocks to Buy Now, we used the Finviz screener to compile a list of 20 stocks catering to relevant industries. We then ranked the stocks in ascending order of their hedge fund sentiment, as of Q2 2024, and chose the following 13 companies.
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).
13 Best Vacation Stocks to Buy Now
13) Golden Entertainment, Inc. (NASDAQ:GDEN)
Number of Hedge Fund Holders: 11
Golden Entertainment, Inc. (NASDAQ:GDEN) is a US-based company, focusing on distributed gaming, casino, and resort operations.
Golden Entertainment, Inc. (NASDAQ:GDEN) appears to be well-placed for a strong long-term outlook as the completion of major renovations in The STRAT, together with the opening of Atomic Golf, should fuel the company’s revenue and EBITDA. The company wrapped up the sale of the Distributed Gaming sector and Maryland Casino Resort in a bid to focus on its Nevada operations and enhance its margins. Moreover, the funds from divestitures were mainly deployed to significantly reduce the leverage and lower interest expenses.
The divestitures seem to be beneficial for Golden Entertainment, Inc. (NASDAQ:GDEN)’s shareholders over the long term. This is because the remaining sectors provide increased EBITDA margins as compared to the sold assets.
Progress was made in reducing reliance on OTAs as there was an increase in direct bookings. The company has not been considering selling its real estate at current cap rates and is waiting for a change in the interest rate environment. With consistent efforts to strengthen the balance sheet (repaying $750 million of debt via FCF and non-core asset sales), Golden Entertainment, Inc. (NASDAQ:GDEN) plans to maintain both strategic and financial flexibility.
As per Wall Street, Golden Entertainment, Inc. (NASDAQ:GDEN)’s stock has an average price target of $38.50. Notably, 11 out of the 912 hedge funds, which were part of Insider Monkey’s Q2 2024 database, had bought a stake in Golden Entertainment, Inc. (NASDAQ:GDEN).
12) Bally’s Corporation (NYSE:BALY)
Number of Hedge Fund Holders: 13
Bally’s Corporation (NYSE:BALY) is a casino-entertainment company, which owns and manages casinos, hotels and resorts, spas, and horse racetracks. The company also provides online gaming and sports betting solutions.
Wall Street analysts believe that the company is expected to see growth in its gross margin because of the expansion into online sports betting and iGaming. The company appears to be well-placed to exploit the opportunities available in expanding online sports betting and iGaming services and enhancing VIP programs. Its growth strategies consist of the expansion of customer databases and developing relationships, mainly in Chicago.
The roll-out of online sports betting should complement Bally’s Corporation (NYSE:BALY)’s existing iGaming offerings in the United Kingdom. This enables the company to capture a significant share of the gaming wallet from present customers who continue to spend on sports offerings with competitors. This can be the company’s strategy to leverage the cost-effective way of tapping new customers. As a result, the company should be able to achieve increased revenue and profitability.
Next, the recent removal of advertising restrictions in Spain is likely to aid Bally’s Corporation (NYSE:BALY). Now, there is a possibility of increased investment and growth in that market. In North America, Bally’s Corporation (NYSE:BALY) continues to focus on its Gaming operations mainly in New Jersey, Pennsylvania, and Rhode Island. This is expected to act as a strong growth enabler. Bally’s Corporation (NYSE:BALY) is targeting to capture a larger market share in the Gaming sector. The company continues to prepare itself for a licensing submission in New York for a new resort in 2025.
As per Insider Monkey’s 2Q 2024 database, 13 hedge funds were long Bally’s Corporation (NYSE:BALY).
11) Red Rock Resorts, Inc. (NASDAQ:RRR)
Number of Hedge Fund Holders: 17
Red Rock Resorts, Inc. (NASDAQ:RRR), along with its subsidiary, is a gaming, development, and management company. It develops strategically located casino and entertainment properties.
The company’s Durango casino should continue to add to its growth prospects. This casino continues to generate strong results which should enable Red Rock Resorts, Inc. (NASDAQ:RRR) to meet its expected 20% ROIC, pay down its debt, and return to its targeted leverage ratio of 3x by next year’s end.
Market experts opine that its new casino, together with strong market growth, should help the company generate high single-digit growth in EBITDA and double-digit FCF growth in upcoming years. With expectations of strong margins on revenues from its new resort, the company’s margins are expected to remain above the pre-COVID levels.
Red Rock Resorts, Inc. (NASDAQ:RRR) continues to eye expansion opportunities and remains confident in its long-term growth strategy, which is expected to be supported by its real estate bank and robust assets in the Las Vegas locals market. Its growth strategy revolves around doubling of portfolio size. While 55,000 new customers signed up at Durango (which indicates market growth), Durango 2.0 expansion should be revenue additive. Red Rock Resorts, Inc. (NASDAQ:RRR) should be able to capitalize on favorable demographic trends and sustain its healthy market position in the competitive Las Vegas gaming and hospitality industry.
Analysts at Susquehanna upped their price objective on the shares of Red Rock Resorts, Inc. (NASDAQ:RRR) from $63.00 to $70.00, giving it a “Positive” rating on 24th July.
Diamond Hill Capital, an investment management company, released its second-quarter 2024 investor letter and mentioned Red Rock Resorts, Inc. (NASDAQ:RRR). Here is what the fund said:
“Among our bottom Q2 contributors were Red Rock Resorts, Inc. (NASDAQ:RRR) and Enovis Corporation. Red Rock Resorts, a casino operator controlling over half the Las Vegas locals market, is facing some concerns about the near-term competitive environment. However, we maintain our conviction in the business’s long-term underlying fundamentals and anticipate it will actually take market share.”
10) Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Number of Hedge Fund Holders: 19
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) offers casino gaming, restaurants, bars, and resort facilities. The company operates City of Dreams, which is an integrated resort in Cotai serving both mass-market and premium-end patrons.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) should see strong revenue growth in the upcoming years mainly because of the sectoral tailwind. The Macao gaming sector appears to be well-positioned to benefit from the reopening of China. This should enable the sector to restore profitability. Wall Street believes that expansion in Thailand appears to be a generational opportunity.
Also, the company is expected to be aided by the rising middle class in China. Despite increased competition in the region, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) should be able to drive top-line growth as a result of new strategies. For example, the company focuses on opening a new exhibition in the White Gallery to increase footfall and emphasize service quality over promotional spending. This might also help in capturing traffic from competitors.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) released its 2Q 2024 financial results, with total operating revenues coming at US$1.16 billion, exhibiting ~22% growth from US$947.9 million in the same period in 2023. This increase was mainly because of improved performance in the mass market segment and non-gaming operations as a result of continued recovery in inbound tourism to Macau during 2Q 2024.
As per Wall Street, the shares of Melco Resorts & Entertainment Limited (NASDAQ:MLCO) have a price target of $9.56. By the end of this year’s second quarter, 19 out of the 912 hedge funds surveyed by Insider Monkey had bought a stake in Melco Resorts & Entertainment Limited (NASDAQ:MLCO).
9) MakeMyTrip Limited (NASDAQ:MMYT)
Number of Hedge Fund Holders: 22
MakeMyTrip Limited (NASDAQ:MMYT) provides travel services and operates websites that allow travelers to research and plan vacations and book airline tickets, hotels, packages, and rental cars.
The company posted strong 1Q 2025 financial performance, with record-high gross bookings, revenue, and adjusted operating profit. MakeMyTrip Limited (NASDAQ:MMYT)’s gross bookings surpassed $2.4 billion, exhibiting a 22% rise on a YoY basis. It saw a strong jump of over 31% YoY, reaching $254.5 million, with adjusted operating profit rising to $39.1 million, up 30% YoY. These strong results were seen on the heels of diversified travel offerings and a strategic focus on different travel segments.
MakeMyTrip Limited (NASDAQ:MMYT) should benefit from the sectoral tailwinds, given the Indian travel market’s strong future and a cultural shift towards more vacations. MakeMyTrip Limited (NASDAQ:MMYT)’s investment in AI and data analytics allowed it to tailor its offerings to cater to the evolving needs of travelers, placing the company for sustained growth in the coming years. Moreover, Wall Street remains optimistic about the corporate travel business and UAE operations, which continue to expand, with higher customer counts and successful marketing campaigns.
In 2H 2024, MakeMyTrip Limited (NASDAQ:MMYT) expects an improvement in the domestic air market supply. The company is focused on maintaining its market share and exploring new growth opportunities.
Analysts at Citigroup initiated coverage on the shares of MakeMyTrip Limited (NASDAQ:MMYT) and increased their price objective from $93.00 to $115.00, giving it a “Buy” rating on 24th July. The number of hedge funds holding MakeMyTrip Limited (NASDAQ:MMYT) stood at 22, with total stakes amounting to $396.9 million.
8) Marriott Vacations Worldwide Corporation (NYSE:VAC)
Number of Hedge Fund Holders: 26
Marriott Vacations Worldwide Corporation (NYSE:VAC) operates hotels. It provides vacation ownership, exchange, rental and resort, and property management.
Marriott Vacations Worldwide Corporation (NYSE:VAC) is expected to see an increase in global share over the upcoming few years, mainly because of the strong intangible asset, which is strengthened by both hotel owners and travelers. The company’s recent 2023 launches of the Spark and StudioRes brands should extend its reach into the midscale and extended-stay segments. Also, these launches can add several hundred hotels each over the upcoming years.
Marriott Vacations Worldwide Corporation (NYSE:VAC) was able to cement its long-term brand advantage with its acquisition of Starwood and partnership with MGM’s Vegas portfolio. Starwood’s luxury portfolio and MGM’s strong presence in gaming continue to complement Marriott Vacations Worldwide Corporation (NYSE:VAC)’s dominant upper-scale position in North America.
The company plans to reduce leverage to 3x by 2025 end and return cash to its shareholders. With the reduction in product costs, the company’s margins should be improved. Recently, Marriott Vacations Worldwide Corporation (NYSE:VAC) announced a 20-year license agreement with Sonder, which should add ~9,000 rooms to the former’s portfolio by the year’s end. As a result, the market estimates that this might help its net unit growth.
In its 2Q 2024 results, Marriott Vacations Worldwide Corporation (NYSE:VAC) highlighted that travel demand remained strong, with resorts running at 90% occupancy. For 2024, the company expects contract sales in the range of $1,790 million – $1,825 million and adjusted EBITDA of between $685 million – $715 million. We saw 26 hedge funds long Marriott Vacations Worldwide Corporation (NYSE:VAC) in the second quarter.
As per Wall Street, the shares of Marriott Vacations Worldwide Corporation (NYSE:VAC) have an average price objective of $122.00. Baron Funds, an investment management firm, released its fourth quarter 2023 investor letter. Here is what the fund said:
“Shares of timeshare company Marriott Vacations Worldwide Corporation (NYSE:VAC) fell in the quarter, driven by soft sales of timeshare units due to higher interest rates and the slow ramp of a new product offering. A default rate that was higher than the company had anticipated forced it to take a charge to increase its reserves, pressuring earnings and cash flow. We opted to exit our position due to the increased stress on its consumer base and a resulting increase in financial leverage, which we found inappropriate for a focused fund.”
7) Wyndham Hotels & Resorts, Inc. (NYSE:WH)
Number of Hedge Fund Holders: 26
Wyndham Hotels & Resorts, Inc. (NYSE:WH) owns and operates a hotel and resort chain. It offers rooms and amenities, pools, resorts, meetings, and events space.
Wyndham Hotels & Resorts, Inc. (NYSE:WH)’s stock price is expected to be supported by the expansion of room share in the hotel industry and its ability to maintain brand intangible assets and switching cost advantage. Moreover, further price and occupancy increases, together with higher demand from increased US infrastructure build-out, should stem revenue growth. The company introduced Wyndham Connect, which is a new guest engagement platform that targets improving customer experiences and boosting ancillary revenues for hotel owners.
While Wyndham Hotels & Resorts, Inc. (NYSE:WH)’s extended stay segment should grow by 6% per year, the company’s growth strategy revolves around focusing on economy and mid-scale segments. The company’s competitive advantages include a successful expansion strategy and its ability to adapt to varying market demands. Moreover, the resilient and highly cash-generative nature of its business model should continue to support its revenues and earnings growth.
Wall Street remains optimistic about the company’s strong development pipeline and strategic investments in various hotel segments. The development pipeline of Wyndham Hotels & Resorts, Inc. (NYSE:WH) went up by 7% YoY to a record 245,000 rooms.
In 2Q 2024, Wyndham Hotels & Resorts, Inc. (NYSE:WH) generated a net income of $86 million against $70 million in 2Q 2023. This increase reflects higher adjusted EBITDA, a benefit in connection with the reversal of the spin-off-related matter, and a lower effective tax rate. For FY 2024, Wyndham Hotels & Resorts, Inc. (NYSE:WH) expects adjusted net income in the range of $338 million – $348 million.
Barclays increased its target price from $88.00 to $90.00, giving it an “Overweight” rating on 26th July. As per Insider Monkey’s 2Q 2024 data, 26 hedge funds held stakes in Wyndham Hotels & Resorts, Inc. (NYSE:WH).
6) Hilton Grand Vacations Inc. (NYSE:HGV)
Number of Hedge Fund Holders: 27
Hilton Grand Vacations Inc. (NYSE:HGV) is a timeshare company, which markets and sells vacation ownership intervals (VOI) and manages resorts in leisure and urban destinations.
Wall Street analysts believe that the company’s revenues and earnings should be aided by strong distribution network growth and lead source diversification with the help of acquisitions. Hilton Grand Vacations Inc. (NYSE:HGV) continues to focus on integrating acquisitions and optimizing its sales and marketing structure. Additionally, the Street remains optimistic about its recently completed acquisition of Bluegreen Vacations.
Apart from the strategic benefits which are expected to come from scale and expanded lead generation, the transaction is expected to be adjusted free cash flow accretive and should generate ~$100 million in run-rate cost synergies in the initial 24 months following close. On a related note, on 17th January 2024, the company announced the completion of this acquisition. The deal also supports its higher FCF conversion and enhances Hilton Grand Vacations Inc. (NYSE:HGV)’s base of recurring EBITDA.
Also, the integration of Diamond Resorts further broadens Hilton Grand Vacations Inc. (NYSE:HGV)’s addressable market via an expanded regional network in the US and a wider range of products and price points.
As per Wall Street, the shares of Hilton Grand Vacations Inc. (NYSE:HGV) have an average price target of $45.20. Insider Monkey’s 2Q 2024 data revealed that the company was held by 27 hedge funds.
Laughing Water Capital, an investment management company, released its second-quarter 2024 investor letter. 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.”
5) Playa Hotels & Resorts N.V. (NASDAQ:PLYA)
Number of Hedge Fund Holders: 33
Playa Hotels & Resorts N.V. (NASDAQ:PLYA) owns, develops, and operates resorts. It also provides lodging, dining, entertainment, and other hospitality services.
Wall Street believes that the company’s growth is likely to come from Yucatan and Dominican Republic
(DR) segments, with healthy occupancy and average daily rate (ADR) growth. For 3Q 2024, Playa Hotels & Resorts N.V. (NASDAQ:PLYA) expects positive RevPAR growth in its Yucatan and DR segments. Its renovation plans for 2025 continue to focus on enhancing guest experience and attracting higher-paying business.
Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is also focused on managing costs as it has repriced its term loan, leading to more than $15 million in annual savings.
Market experts believe that the upcoming renovations should help the company enhance value and experience at the resorts, which will potentially help Playa Hotels & Resorts N.V. (NASDAQ:PLYA) in increasing its market share. The renovation plans for Zilara Cancun resort focus on complete reinvention, and expectations of increasing the room count and adding higher category room types.
Playa Hotels & Resorts N.V. (NASDAQ:PLYA)’s strategic investments in renovations and capital projects are focused on attracting more profitable business segments. As per Wall Street, the shares of Playa Hotels & Resorts N.V. (NASDAQ:PLYA) have an average price objective of $10.25. By the end of the second quarter, 33 hedge funds held stakes in Playa Hotels & Resorts N.V. (NASDAQ:PLYA), according to Insider Monkey’s database.
4) Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 42
Wynn Resorts, Limited (NASDAQ:WYNN) owns and operates hotels and casino resorts. It provides amenities like guest rooms and suites, restaurants, golf courses, spas, bars, and other vacation-related and leisure facilities.
Wynn Resorts, Limited (NASDAQ: WYNN) continues to possess attractive long-term growth opportunities in Macao, backed by its high-end iconic brand. As a result, the company should be able to capture gross gaming revenue share moving forward. Its Las Vegas revenue and adjusted EBITDA margins are expected to be supported by cost-efficiency improvements and revenue scale for the upcoming years. The company’s strategic locations in critical tourist destinations such as Macau and Las Vegas are expected to act as major strengths.
Considering the renewal of the gaming concession contract for another 10 years, Wall Street believes that Wynn Macau SA is well-placed to capitalize on the region’s growth. In its 2Q 2024 results, Wynn Resorts, Limited (NASDAQ:WYNN) highlighted its strength throughout its business. The company continues to focus on growth as the construction of Wynn Al Marjan Island in the UAE has been advancing rapidly. Also, Wynn Resorts, Limited (NASDAQ: WYNN) recently finalized a transaction to acquire the pro-rata share of land on Al Marjan Island Three. This should help the company secure a substantial land bank for strong future development opportunities.
As of 2Q 2024, 42 hedge funds held long positions in Wynn Resorts, Limited (NASDAQ:WYNN). Analysts at Seaport Res Ptn upgraded the shares of Wynn Resorts, Limited (NASDAQ:WYNN) from a “Hold” rating to a “Strong-buy” rating on 30th May. Baron Funds, an investment management company, released its fourth quarter 2023 investor letter and mentioned Wynn Resorts, Limited (NASDAQ:WYNN). Here is what the fund said:
“The shares of Wynn Resorts, Limited (NASDAQ:WYNN), an owner and operator of hotels and casino resorts, declined modestly in the most recent quarter, in part due to concerns about economic weakness in China.
We remain optimistic about the multi-year prospects for the company. We believe the ongoing re-emergence of business activity in Macau will drive additional shareholder value. If cash flow returns to the level achieved in 2019 prior to COVID-19, we believe Wynn’s shares will increase 30% to 50% higher than where they have recently traded.
We believe additional drivers for future value creation beyond a re-emergence in Macau business activity include: (i) our expectation for long-term growth opportunities in the company’s U.S.-centric markets of Las Vegas and Boston, including an expansion of Wynn’s Encore Boston Harbor resort; (ii) Wynn’s plans to develop an integrated resort in the United Arab Emirates with 1,500 hotel rooms and a casino that is similar in size to that of Encore Boston Harbor; (iii) opportunities to improve cash-flow margins by rightsizing labor and achieving lower staff costs in Macau; (iv) the possibility that Wynn is granted a New York casino license; and (v) an expansion in the company’s valuation multiple to levels achieved prior to the pandemic.”
3) Carnival Corporation & plc (NYSE:CCL)
Number of Hedge Fund Holders: 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, among others.
Market experts believe that Carnival Corporation & plc (NYSE:CCL) has been focusing on optimizing occupancy. This will help passenger counts and yields rise at a faster pace. Carnival Corporation & plc (NYSE:CCL)’s strategic initiatives, including fleet expansion and new markets, should add to its growth potential. Through continuous innovation and improved offerings, the company is well-positioned to increase its market share and drive future growth.
Carnival Corporation & plc (NYSE:CCL)’s competitive advantage revolves around exceptional cost management and operational efficiency. In 2Q 2024, the company paid $6.6 billion of its debt, which is a testament to its financial stability. The company’s reservations book remains strong as the company amassed ~$8.3 billion in client deposits for the upcoming trips.
Carnival Corporation & plc (NYSE:CCL) raised its FY 2024 net yield guidance (in constant currency) to ~10.25% as a result of continued robust demand. It also raised full-year adjusted net income guidance by ~$275 million. At the time of announcing its 2Q 2024 results, the company highlighted that its cumulative booked position for FY 2025 remains higher than 2024 in both price (in constant currency) and occupancy.
As per Insider Monkey’s 2Q 2024 database, 53 hedge funds reported owning stakes in Carnival Corporation & plc (NYSE:CCL). Argus upped their price target on the shares of the company from $20.00 to $25.00, giving it a “Buy” rating on 27th June.
2) Caesars Entertainment, Inc. (NASDAQ:CZR)
Number of Hedge Fund Holders: 54
Caesars Entertainment, Inc. (NASDAQ:CZR) owns and operates as a chain of resorts. It provides casino, poker, roulette, and other gaming facilities, and offers food and beverage services.
Caesars Entertainment, Inc. (NASDAQ:CZR) plans to leverage its national network via a loyalty program, which should encourage increased visitation to multiple properties. Given the strong push in online gaming, a healthy sportsbook, and a balanced casino business between Las Vegas and regional locations, Wall Street believes that the company is well-positioned for future growth. Caesars Entertainment, Inc. (NASDAQ:CZR has now focused on completing its capital expenditure cycle, reducing its debt, and buying back its stock.
Wall Street analysts believe that the company is expected to see strong performance and favorable gaming revenue in Las Vegas, courtesy of its strong pricing power in the market. There is optimism regarding its sports and iCasino segments, and the company anticipates a strong year-end finish. Caesars Entertainment, Inc. (NASDAQ:CZR) is also expecting a significant increase in FCF, which it plans to use for debt and leverage reduction.
The company released its 2Q 2024 financial results. On a consolidated basis, Caesars Entertainment, Inc. (NASDAQ:CZR) was able to generate $1 billion of Adjusted EBITDA. Its operating results demonstrate YoY growth in Adjusted EBITDA in its Las Vegas segment as a result of record same-store revenues, hotel occupancy, and Average Daily Rate (ADR).
The company is optimistic about 2H 2024 as a result of healthy operating trends in its Las Vegas and Caesars Digital segments. Moreover, anticipated openings of a permanent facility in Danville and its $430 million capital investment in the newly rebranded Caesars New Orleans property should also act as growth drivers. Analysts at JMP Securities upped their price objective on the shares of Caesars Entertainment, Inc. (NASDAQ:CZR) from $58.00 to $59.00, giving it a “Market outperform” rating on 22nd August. Insider Monkey’s 2Q 2024 data revealed that the company was in the portfolios of 54 hedge funds.
Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“In the most recent quarter, we chose to lower the Fund’s large exposure to travel-related real estate companies and exited the Fund’s position in Caesars Entertainment, Inc. (NASDAQ:CZR), the largest casino-entertainment company in the U.S. and one of the world’s most diversified casino-entertainment providers.
We have near-term reservations about a possible moderation in consumer demand for some of Caesars’ properties and believe the move higher in interest rates and a largely quiet transaction market also negatively impact certain highly leveraged companies such as Caesars. We are fans of CEO Tom Reeg and may revisit Caesars for purchase at a later date.”
1) Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 63
Airbnb, Inc. (NASDAQ:ABNB) operates an online marketplace for travel and booking services. The company provides lodging, homestay, and tourism services.
The company is expected to be supported by its strong network effects. Experts believe that Airbnb, Inc. (NASDAQ:ABNB)’s network has reached a critical mass scale, thanks to its healthy booking share of the alternative accommodation market along with ongoing expansion into experiences. Over the coming years, the company’s network advantage will be supplemented by artificial intelligence investment and further expansion into the experiences vertical and global markets. Also, the company appears to be well-positioned to benefit from the shift to mobile bookings.
Moreover, Airbnb, Inc. (NASDAQ:ABNB) should be aided by its unique asset-light business model, which is less common in the travel industry. This is because the company does not own or operate the stays listed on its platform. Even though travel spending remains a cyclical business, the consistent consumer spending category over the long term should continue to support Airbnb, Inc. (NASDAQ:ABNB). The company also has strong financial health, courtesy of its prudent management of finances, which is demonstrated by the higher cash reserves as compared to its liabilities.
As per Wall Street analysts, the shares of Airbnb, Inc. (NASDAQ:ABNB) have an average price target of $126.65. In the second quarter, 63 hedge funds held positions in the stock, totalling $2.61 billion.
Polen Capital, an investment management company, released its first-quarter 2024 investor letter and mentioned Airbnb, Inc. (NASDAQ:ABNB). Here is what the fund said:
“During the quarter, we initiated new positions in Sage Group and Airbnb, Inc. (NASDAQ:ABNB) and added to our existing position in Globant.
Airbnb is a great business model, according to our research, due to its two-sided global network effects. For several reasons, Airbnb has a better mousetrap with its supply growth engine, with its hosts having a far lower cost of capital and more flexibility than hotels. We think private rentals should continue to grow their share of overall accommodation stays, potentially up to 30% of lodging or higher over the long term, letting the private rental gross booking value grow at a low double-digit rate. We also think Airbnb should continue to gain share within the private rental market as its global network effects strengthen, allowing for mid-teens revenue growth. With flat to rising margins over time, significant free cash flow generation, and a management team that has demonstrated its owner orientation, this should result in high-teens EPS growth over time. While the path there will not be linear, and it is a more discretionary spending-tied business, we think the long-term secular growth opportunity is very compelling.”
While we acknowledge the potential of ABNB 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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