On Tuesday, Jim Cramer, the host of Mad Money, discussed the recent struggles in the travel sector and shared where he sees potential opportunities for investors.
“After weeks of carnage, we finally get a decent session thanks largely to a cooler-than-expected consumer price index rating but this is still an insanely volatile market as you know, as President Trump keeps ramping up the trade wars. Still, at this point, so many high-quality stocks have come down so much that we’re bound to find some great buying opportunities.”
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Cramer pointed to the travel sector, which had been a darling of Wall Street but has since lost much of its luster. Once considered a prime sector during the bull market, it has quickly fallen out of favor. Still, Cramer sees potential in the sector, especially for airlines, as a weaker economy is not necessarily all bad news for them. For one, he highlighted that falling oil prices could lead to significant savings on fuel costs.
Cramer said that he does not think the recent challenges facing airlines are catastrophic for the industry. With airline stocks down between 30% to 40% from their highs, he sensed an opportunity, although he cautioned investors to be selective. Furthermore, he noted that executives from top airlines have indicated that many of the industry’s structural advantages, such as reduced capacity this year, remain intact.
Cramer also turned his attention to the cruise line sector, which has experienced significant declines, with stocks for the major players down by 25% to 35% from their recent peaks. He said that he understood the reasons behind this drop. He noted that in addition to broader concerns about consumer spending, new Commerce Secretary Howard Lutnick recently threatened the cruise lines with higher taxes. Cramer emphasized that many of these cruise lines are domiciled overseas and, as a result, do not pay U.S. taxes.
“Here’s the bottom line: Even with all of this trade war turmoil, I’m not ready to give up on the beaten-down travel space, which has been so good for so long and that’s why I like United Airlines, Royal Caribbean, and Airbnb. I think all are worth buying right here because it’s kind of an amazing bout of weakness after a real big run.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on March 12. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 hedge funds.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Jim Cramer on These 7 Travel and Leisure Stocks
7. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 54
Cramer praised Airbnb, Inc. (NASDAQ:ABNB) as a “major disruptor in the lodging industry”, noting that he has supported the company since its public debut. He added:
“This stock… gapped up from $140 to a new nine-month high of $163 last month after the company surprised us with a much better-than-expected quarter, which prompted several analysts to upgrade the darn thing… It’s, it’s given up all those gains and then some, falling back to $126 and change after a few weeks of nasty trading, Oh, I like this one too.
So you’re getting Airbnbs last quarter, which was fantastic, for free and that’s actually putting it lightly given the scale of the decline. Of course, I don’t just like this one because it’s cheap. I like it because it is a true disruptor in the industry and a long-term secular winner. Given that Airbnb’s become the preferred way for younger people to travel, and by the way, the brick-and-mortar rooms are so expensive, that’s why I think the stock’s worth buying into weakness, especially now that it’s only up about 15 bucks from its 52-week low. Ah, I like Airbnb.”
Airbnb (NASDAQ:ABNB) operates a well-known platform that connects hosts with guests, providing a range of accommodations and experiences. The marketplace is accessible through both online and mobile platforms.
6. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Number of Hedge Fund Holders: 58
Cramer discussed the recent turbulence in the cruise industry and pointed out the contrast between the market’s negative reaction and the optimistic outlook shared by Jason Liberty, CEO of Royal Caribbean Cruises Ltd. (NYSE:RCL). Cramer found it hard to reconcile the market’s harsh response with Liberty’s positive comments. He added:
“When he came on the show last week, first, Liberty confirmed that its… consumers perceive Royal Caribbean cruises as a better value than a land-based vacation, reinforcing my view the cruise lines can still do fine even in a softer economy. Second, he cited its own bookings and on-ship spending data from recent voyages, saying matter-of-factly, ‘that cash register continues to ring and be consistent.’
Finally, looking at longer term, Liberty noted that, this is so important, understand this major, major ratio, the new supply, meaning new cruise ships, should continue to be limited for the next few years, which is positive for the entire industry’s pricing power. At one point you see the pricing power go down when they have a lot of ships coming. Plus, altogether, I feel really okay about the cruise lines, Royal Caribbean in particular. This had a 25% pullback from its recent high, stock now sells for a very… undermining 14 times earnings. I like that.”
Royal Caribbean (NYSE:RCL) runs a range of cruise services under its brands, such as Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, providing a wide variety of itineraries.
5. JetBlue Airways Corporation (NASDAQ:JBLU)
Number of Hedge Fund Holders: 33
JetBlue Airways Corporation (NASDAQ:JBLU) provides air transportation services. Cramer noted that airline stocks have fallen sharply by 35 to 40% in the past few weeks, which he believes could present an appealing opportunity. Despite the sizable drop, he maintained that the overall news about the industry is not as bad as it may initially seem.
Discussing JetBlue Airways (NASDAQ:JBLU), he commented, “Jet Blue also rallied about 4% Tuesday after the low-cost airline reaffirmed its first-quarter outlook. That was surprising.” Furthermore, in January, Cramer noted:
“There’s still some laggard, haggard companies out there that can act like skunks at a profits party. That’s what JetBlue was today with its terrible earnings and outlook that caused that stock to lose over 25% of its value in a single session. Still, one more reason why I always like to say I’d rather own shares in the worst cruise line than the best airline.”
4. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 86
Talking about United Airlines Holdings, Inc. (NASDAQ:UAL), he said, “United said it expects its numbers to come in at the lower end of its guidance. As a result, the airline stocks were eviscerated on Tuesday.” However, Cramer pointed out that airline stocks have experienced a significant drop of 35 to 40% in recent weeks, which he views as potentially attractive for investors. Even with the steep decline, Cramer felt that the news surrounding the industry is not as negative as it appears at first glance. He went on to say:
“United stock was only down 2% yesterday after they said they’re gonna hit the lower end of the guidance… I like United, which I think has supplanted Delta as the best-run airline out there. United CEO Scott Kirby still sounded very confident in the company’s outlook at the JPMorgan conference yesterday. He said it continued strength in many parts of the business away from the weaker low-end domestic leisure market in government travel…
They also spent plenty of time explaining how they’ve pulled away from the industry in many respects when it comes to efficiency. With the stock down almost 38% from its January highs, now trading at less than six times this year’s earnings estimates, give me some. Amazing buying opportunity.”
3. Southwest Airlines Co. (NYSE:LUV)
Number of Hedge Fund Holders: 34
Cramer highlighted Southwest Airlines Co. (NYSE:LUV) rallied despite cutting its forecast as he stated:
“Southwest cut its revenue per available seat mile forecast… But honestly, these names have already come down dramatically over the past few weeks. This makes them very interesting to me. After this week’s blood bath, you got a lot of them are down 35 to 40%. So given all the newfound negativity, why on earth would I stick my neck out and recommend some cheap travel plays?
Look, as tough as these airlines, the updates were, the collective news, frankly, it wasn’t that horrible, at least not if you listen closely… Southwest actually rallied after giving soft revenue per available seat mile forecast, though that was likely due to some other announcements, including an end of the blanket bags fly-free policy. These guys have gotten real religion on trying to make money.”
Southwest Airlines (NYSE:LUV) is an airline based in the U.S., providing scheduled air travel services within the United States and to a few nearby international destinations.
2. American Airlines Group Inc. (NASDAQ:AAL)
Number of Hedge Fund Holders: 59
Cramer noted American Airlines Group Inc.’s (NASDAQ:AAL) earnings outlook as he said:
“And several other airlines mainly followed suit. American slashed revenue outlook for the first quarter and guided for much larger than expected loss… But honestly, these names have already come down dramatically over the past few weeks. This makes them very interesting to me. After this week’s blood bath, you got a lot of them are down 35 to 40%.
So given all the newfound negativity, why on earth would I stick my neck out and recommend some cheap travel plays? Look, as tough as these airlines, the updates were, the collective news, frankly, it wasn’t that horrible, at least not if you listen closely.”
American Airlines (NASDAQ:AAL) is an air carrier that provides scheduled air transportation services. Interestingly enough, before the airline reported its earnings, on March 11, Cramer commented, “Delta, great Airline but it’s going to miss the numbers big. Same with American Airlines.”
1. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 84
Delta Air Lines, Inc. (NYSE:DAL) was mentioned during the episode, and here’s what Cramer had to say:
“Now for those of you who haven’t been paying attention, this week Delta Airlines slashed its first-quarter earnings outlook, citing, ‘the recent reduction in consumer and corporate confidence caused by increased macro uncertainty’, which they say drove ‘softness and domestic demand’ in recent weeks. Now for a long time, Delta was the best of the airlines so you really don’t want to hear that kind of commentary from them. Now these guys cut their guidance ahead of an appearance at the JPMorgan Industrials conference on Tuesday.”
Cramer highlighted that many airline stocks have dropped by 35 to 40% in recent weeks, making them intriguing investment opportunities. Despite the sharp decline, Cramer believed the overall news about the industry isn’t as bad as it may seem. He added:
“Let’s start with Delta, which kicked things off with this guidance cut. Monday night, Delta CEO Ed Bastian spoke with CNBC’s Phil LeBeau on Closing Bell that night and explained that the domestic, corporate, and consumer spending ‘started to stall’ in February, mostly due to lower consumer confidence. But he also said he believes this weakness is transitory… Bastian is pretty confident we’re not headed for a real recession.
Delta cut the revenue growth forecast from 8% to 4%… It is not great but in a recession, they, they’d be down double digits. Bastian also noted that some of the weakness came after a couple of high-profile air safety instances.”
Delta Air Lines, Inc. (NYSE:DAL) is an airline that provides passenger and cargo services across a broad range of domestic and international routes.
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