We recently compiled a list of the 10 Best Leisure Stocks To Buy Now. In this article, we will look at where Booking Holdings Inc. (NASDAQ:BKNG) stands against the best leisure stocks to buy now.
In recent years, the leisure market has experienced remarkable growth. According to Market Research Intellect, the size of the global leisure market was estimated at $1.46 trillion in 2023 and is projected to expand at a compound annual growth rate of 21.8% from 2024 to 2031, when it will have grown to $8.6 trillion.
Along with growth, according to the YouGov survey, there were also notable changes in the leisure and entertainment industry in 2023 due to changing customer demands and technological breakthroughs. Even though 81% of US and 79% of UK customers recognize the value of museums, more than half of them only occasionally visit them. On the other hand, only 5% of people in the APAC and UAE skip theme parks, compared to 30% in North America.
While out-of-home entertainment expenses are on the rise, 13% of customers intend to spend more. Additionally, 36% of viewers find advertisements entertaining, and 36% of them are using virtual reality. In the United States, 10% prefer to buy movie tickets in advance, while 27% are concerned about how AI breakthroughs may affect professions, notably in information technology and accounting.
In the meantime, gambling is changing; 70% of US gamblers are open to sports betting with AI assistance, and cryptocurrency betting is becoming more popular in the US and the UK. As we have mentioned in our article, “10 Best Sports Betting Stocks to Buy Now,” generative AI is projected to dramatically impact sports betting in the next 12-18 months.
As per YouGov study, with 10% of UK consumers possessing smart devices and 24% looking at second-hand equipment, the fitness industry has also experienced growth. In general, live events such as food and drink festivals remain popular; even with safety concerns, 45% of attendees want to participate in 2024. Lastly, a shift in consumer views is evident in the rise of dynamic pricing, particularly in the US, where 54% of consumers are willing to pay more to support artists.
On the other hand, the size of the global leisure travel market was valued at $340.31 billion in 2022 and is projected to grow at a CAGR of 22.6% from USD 417.3 billion in 2023 to $2129.96 billion by 2031, as per SkyQuest.
Regionally, North America has been the market leader for leisure travel, especially the United States and Canada. However, when it comes to the global leisure travel industry, Asia-Pacific is expanding at the fastest rate. Countries in Southeast Asia, such as China and India, are major destinations for tourists in the area.
Amid the growth, a most recent Longwoods International tracking study of American travelers indicates that 39% of them plan to go abroad for leisure over the next 12 months. Furthermore, 34% of those who plan to travel abroad for leisure say they will travel abroad more this year, 50% plan to take about the same number of such trips, and only 16% say they would travel abroad less.
Amir Eylon, President and CEO of Longwoods International, stated that the expected boost in international travel by Americans is impressive, given lingering concerns about inflation and the financial health of the U.S. consumer. Moreover, he revealed that it is further evidence that American travelers see COVID-19 fading away in their rear-view mirror.
Methodology:
We sifted through holdings of leisure ETFs and online rankings to form an initial list of 20 leisure stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
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)
Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 96
Booking Holdings Inc. (NASDAQ:BKNG), which offers booking and payment services for hotel and other lodging rooms, airline tickets, rental cars, restaurant reservations, cruises, experiences, and other vacation packages, is the largest online travel agency in the world based on sales. The company owns and runs multiple branded travel booking websites, such as Booking.com, Agoda, OpenTable, and Rentalcars.com. With the acquisition of Kayak and Momondo, it has now entered the travel media space. The majority of the revenue and profits come from transaction fees for online reservations.
The firm is showing strong financial health and a strong network advantage. It has a strong position in the Asia-Pacific region, ongoing leadership in Europe, and a growing presence in the booking of restaurants, experiences, flights, and hotels, all of which are supported by advanced marketing and technological scale.
The fact that the travel industry is expected to witness record-breaking passenger volumes by the end of 2024 lends credence to the bullish thesis around the company. Aside from its good fundamentals, Booking Holdings Inc. (NASDAQ:BKNG) has strong catalysts working in its favor. It is still going through a phase of fast expansion. Between 2021 and 2023, the company’s revenues almost doubled, and its total profitability rose as well.
In light of the Booking’s solid financial performance, attractive valuation, and excellent room-night growth, Mizuho Securities analyst James Lee reiterated his Buy recommendation for the company.
Strong growth was shown by the firm in Q2 2024 in several important categories, including a 7% increase in room nights booked and a 4% increase in gross travel bookings YoY. Its revenues increased by 7% YoY, showing strong demand in the tourism industry. The net income increased by 18% to $1.5 billion, which resulted in a 27% rise in EPS to $44.38 YoY.
Wedgewood Partners, an investment management company, released first quarter 2024 investor letter and mentioned about Booking Holdings Inc. (NASDAQ:BKNG). Here is what the company said:
“Booking Holdings Inc. (NASDAQ:BKNG) contributed negatively to relative performance. The Company grew bookings on their platforms +16% and reported +22% growth in adjusted operating income during their fourth quarter of 2023. We think the market is cautious about the Company’s results for 2024 because they will be lapping very high levels of growth compared to those in 2023 (full year 2023 bookings growth +24%). However, Booking’s end markets continue to be quite healthy, outside of geographies affected by war because consumers still have plenty of wallet share to re-dedicate to travel compared to pre-COVID-19 numbers. We applaud the Company as they aggressively repurchase shares at valuation levels well below the market and peers. This should serve to compound our ownership in Booking’s business, which has exceptional profitability.”
Ken Fisher’s Fisher Asset Management is the largest shareholder in the company, with 405,313 shares worth $1.605 billion.
Overall BKNG ranks 1st on our list of the best leisure stocks to buy now. While we acknowledge the potential of BKNG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BKNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This post was originally published on Insider Monkey.