7 Cheap Travel Stocks to Buy According to Analysts

3) Marriott Vacations Worldwide Corporation (NYSE:VAC)

Average Upside Potential: 14.38%

Forward P/E as of September 27: 10.75x

Number of Hedge Fund Holdings: 26

Marriott Vacations Worldwide Corporation (NYSE:VAC) is engaged in the business of operating hotels. It provides vacation ownership, exchange, rental and resort, property management, management of other resorts, and lodging properties.

Marriott Vacations Worldwide Corporation (NYSE:VAC) focuses on reducing leverage to 3 times by 2025 end and returning cash to shareholders. It recognizes the need to adjust promotions and strategies to improve VPG (volume per guest), mainly among first-time buyers. The company anticipates tour growth to increase by 2 – 3 points from the packaged pipeline and plans to open new resorts in locations such as Waikiki, Savannah, Charleston, Thailand, and Bali over the upcoming few years.

In Q2 2024, the company has seen its product costs coming in lower than anticipated, which should be beneficial for Marriott Vacations Worldwide Corporation (NYSE:VAC)’s margins. Its commitment to expanding the resort portfolio and improving the sales performance, while at the same time managing financial risks, exhibits a balanced approach to growth and stability.

Recently, Marriott Vacations Worldwide Corporation (NYSE:VAC) announced a 20-year license agreement with Sonder. This should add ~9,000 rooms to the former’s portfolio by the year’s end. Therefore, Wall Street believes that this can help its net unit growth. As per Insider Monkey’s Q2 2024 data of 912 hedge funds, the company was in the portfolios of 26 hedge funds.

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.”