5 Best Travel Stocks To Buy Right Now

1. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 112

The Walt Disney Company (NYSE:DIS) is one of the best travel stocks to invest in. The company offers Disney Parks and Experiences worldwide, in addition to distributing media and entertainment content. Morgan Stanley analyst Benjamin Swinburne on December 12 maintained an Overweight rating on The Walt Disney Company (NYSE:DIS) but lowered the firm’s price target on the shares to $115 from $125. He trimmed his estimates to reflect updated FY23 guidance, which he views as “achievable even with current macro environment and linear pressures.” The return of Bob Iger as CEO offers the opportunity to reorganize Disney’s Media businesses to prioritize driving overall consolidated earnings growth, added the analyst. 

According to Insider Monkey’s data, 112 hedge funds were bullish on The Walt Disney Company (NYSE:DIS) at the end of the third quarter of 2022, compared to 109 funds in the last quarter. Ken Fisher’s Fisher Asset Management is a prominent stakeholder of the company, with 5.14 million shares worth $485 million. 

Here is what Third Point specifically said about The Walt Disney Company (NYSE:DIS) in its Q3 2022 investor letter:

“As disclosed in our Q2 letter, we reinitiated a significant position in The Walt Disney Company (NYSE:DIS) when the company retested its Covid lows earlier this year. At the current price, Disney is trading for little more than the stand-alone value of its Parks business and a mere 15x ’24 “street” consensus. The company remains early in its Direct to Consumer (“DTC”) transition with a leading market position, and yet the current stock price ascribes negligible value to the streaming business. We believe this is due to questions around the terminal economics of streaming, given large losses being generated today at Disney (>$1 billion dollars last quarter) and stagnating margins at peers such as Netflix. On the last earnings call, management highlighted three items that could lead to an inflection in DTC profitability over the next 12 months: a 38% price increase for Disney+ in the US; moderating growth in cash content expense; and an advertising tier for Disney+ launching in two months that can drive additional ARPU given high demand for the Disney brand amongst advertisers.

While the company has guided Disney+ achieving breakeven sometime within the fiscal year ending September 2024, the valuation suggests the market remains skeptical. Disney only trades at ~14x the $7 in earnings generated prior to the Fox acquisition, which implies investors don’t expect earnings to meaningfully exceed this figure in the coming years. Hence, the first value driver we highlighted in our last letter is the opportunity for management to optimize Disney’s cost base to drive earnings growth. We believe Disney has ample means to rationalize costs across its operating platform and deliver targeted content for home viewing that does not entail the same cost structure of exclusive theatrical releases…” (Click here to view the full text)

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