Solid progress on the vaccination front and the easing of COVID-19 restrictions allowed the travel industry to rebound slightly last year. Furthermore, AAA had predicted that 39.20 million people will travel 50 miles or more from home this Memorial Day weekend, marking an increase of 8.3% over 2021 and almost in line with the pre-pandemic levels.
Furthermore, a survey shows nearly three-quarters of Americans have made summer travel plans this year, a considerable increase from 53% in 2021. Investor’s interest in this space is evident from the ALPS Global Travel Beneficiaries ETF’s (JRNY) 6.9% returns over the past week. Revenue in the travel and tourism market is expected to grow at a 10.5% CAGR to $949.60 billion by 2026.
Given this backdrop, we think prominent travel and tourism stocks Expedia Group, Inc. (EXPE), InterContinental Hotels Group PLC (IHG), Travelzoo (TZOO), Travel + Leisure Co. (TNL), and Bluegreen Vacations Holding Corporation (BVH) are well-positioned to profit substantially this summer. So, it could be wise to bet on them now.
Expedia Group, Inc. (EXPE)
EXPE is a Seattle, Wash.-based international online travel company that operates through Retail; B2B; and trivago segments. The company offers a wide range of travel shopping and reservation services, advertising, and media services and provides real-time access to schedule, pricing, and availability information for airlines, hotels, and car rental companies.
On May 4, 2022, at its EXPLORE 22 annual partner event, EXPE debuted a three-tiered strategy to serve travelers and its partners and redefine its place in the industry. Expedia Group Open World, its new technology platform, leverages and configures products and services and accelerates and enhances the travel business. It introduced a reimagined marketplace that uses traveler reviews, customer service interactions, and more to reward each hotel property with a new guest experience score. It also introduced trip boards, smart shopping, and price tracking features to add confidence and trust to the travel shopping and booking experience. This should help EXPE gain wide recognition across the industry.
For its fiscal 2022 first quarter, ended March 31, 2022, EXPE’s revenue increased 80.5% year-over-year to $2.25 billion. The company’s adjusted EBITDA came in at $173 million, compared to a $58 million loss in the prior-year period. As of March 31, 2022, the company had $5.55 billion in cash and cash equivalents.
Analysts expect EXPE’s EPS to grow 342.4% year-over-year to $7.30 for its fiscal 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $11.78 billion consensus revenue estimate for the same fiscal year represents a 37% rise from the prior year. The company’s EPS is expected to grow at a 22.8% rate per annum over the next five years. Over the past week, the stock has gained 5.1% in price to close yesterday’s trading session at $130.97.
EXPE’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Growth, Value, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for EXPE’s Momentum, Sentiment, and Stability here.
EXPE is ranked #4 of 69 stocks in the F-rated Internet industry.
Note that EXPE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
InterContinental Hotels Group PLC (IHG)
Based in the U.K., IHG owns, manages, franchises, and leases hotels, resorts, restaurants, and spas under an established and diverse group of brands worldwide. The company manages hotel loyalty and priority club rewards programs. As of Dec. 31, 2021, the company operated 5,991 hotels and 880,327 rooms in approximately 100 countries.
On May 31, 2022, IHG signed a landmark three-hotel portfolio deal with ConBap Ecological Tourist Co. Ltd. in Hoi An, Vietnam–a UNESCO World Heritage Site. Expected to operate from 2024 onwards, IHG’s boutique lifestyle brand Hotel Indigo, premium hotel brand Crowne Plaza, and fastest-growing brand Holiday Inn Express will be located within a vibrant new mixed-use development, Hoian d’Or, and help the government’s plan to maintain it as one of Vietnam’s most visited destinations. This deal should help IHG establish itself as a market leader in Central Vietnam.
On May 30, 2022, IHG opened its second voco hotel in Italy, named voco Venice Mestre–The Quid, in partnership with HNH Hospitality, one of the leading independent operators of 4- and 5-star hotels in Italy. Located near a bypass connecting Mestre to Venice Marco Polo airport and the main train station, the Quid, with 128 guest rooms, blending functionality and a contemporary style, should be a convenient choice for business or leisure travelers.
For its fiscal 2021 full year, ended Dec. 31, 2021, IHG’s total revenue increased 21.4% year-over-year to $2.91 billion. The company’s operating profit came in at $494 million, compared to a $153 million loss in the year-ago period. Its adjusted net earnings have increased 371.9% year-over-year to $269 million. IHG’s adjusted EPS came in at $0.15, representing a 369.7% rise from the prior-year period. And as of Dec. 31, 2021, the company had $1.45 billion in cash and equivalents.
Analysts expect the company’s EPS to improve 74.4% year-over-year to $2.56 for its fiscal 2022, ending Dec. 31, 2022. The $1.82 billion consensus revenue estimate of for the same fiscal year represents a 31.2% rise from the prior year. Over the past week, the stock has gained 5.8% in price to close yesterday’s trading session at $63.18.
IHG’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Sentiment. Click here to see the additional ratings for IHG’s Value, Stability, Quality, and Momentum.
IHG is ranked #5 of 22 stocks in the C-rated Travel - Hotels/Resorts industry.
Travelzoo (TZOO)
New York City’s TZOO is a media commerce company that provides travel, entertainment, and local deals from various companies and businesses worldwide. The company serves airlines, hotels, cruise lines, vacation packages, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies.
On March 14, 2022, TZOO announced the creation of its new Metaverse division, Travelzoo META, a paid subscription-based service that provides members with exclusive access to the latest and best Metaverse travel experiences. Planning to launch in April, TZOO will work with various creators to offer experiences exclusively to Travelzoo META members and continue to publish exclusive real-world travel and lifestyle deals. This should help TZOO witness an increasing customer base in the coming months.
On March 7, 2022, TZOO acquired the business unit of London-based members-only travel company Secret Escapes in Spain. This acquisition strengthens TZOO’s brand and business in Spain and will enable it to raise advertising rates and operate with greater efficiency. The company’s offering of high-quality, exclusive deals and experiences should help it gain wide reach across new markets.
TZOO’s revenue for its fiscal 2022 first quarter, ended March 31, 2022, increased 29.2% year-over-year to $18.45 million. The company’s gross profit was $15.62 million, representing a 38.7% year-over-year improvement. Its non-GAAP operating income came in at $2.70 billion for the quarter, indicating a 333.9% rise from the prior-year period. TZOO’s net income came in at $2.36 million, compared to a $1.64 million net loss in the year-ago period. Its EPS was $0.19, versus a $0.14 loss per share in the prior-year period. The company had $35.62 million in cash and cash equivalents as of March 31, 2022.
The $0.74 consensus EPS estimate for fiscal 2022, ending Dec.31, 2022, represents a 722.2% year-over-year improvement. Analysts expect its revenue to grow 27.2% year-over-year to $80.38 million for the same fiscal year. The company’s EPS is expected to grow at a 19.8% rate per annum over the next five years. Over the past week, it has gained 4.8% in price to close yesterday’s session at $7.23.
TZOO’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Sentiment and Quality and a B grade for Value. Click here to see the additional ratings for TZOO (Momentum, Growth, and Stability).
The stock is ranked #3 in the Internet industry.
Note that TZOO is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
Travel + Leisure Co. (TNL)
TNL in Orlando, Fla., provides hospitality services and products through its Vacation Ownership and Travel and Membership segments. The company focuses on providing vacation ownership, managed rental, and exchange services and owns vacation resorts and exchange properties. It also offers private-label travel booking technology solutions. As of Jan. 26, 2022, it had approximately 245 vacation ownership resorts.
On May 23, 2022, TNL’s Wyndham Destinations vacation ownership business opened its new resort, The Moab Resort, an affiliate of the WorldMark by Wyndham vacation club, in Moab, Utah. Set along the pristine Colorado River basin, this new resort offers a 150-suite desert retreat for outdoor enthusiasts and provides convenient access to two of Utah’s national parks–Canyonlands and Arches. The companies are expected to generate significant bookings this summer.
On April 21, 2022, TNL’s Wyndham Destinations completed installing solar panels at its Limetree Beach Resort by Club Wyndham. They will finish installation at the WorldMark Clear Lake Resort in Nice, California, this spring. It also announced plans to install water use reduction and leak detection technologies in guest suites that cut water use by 15-17%. TNL will have an estimated annual solar output of more than nine million kilowatt-hours at 19 properties across the U.S. The company plans to invest in opportunities to reduce water and energy use across its portfolio of 245 resorts.
TNL’s net revenues for its fiscal 2022 first quarter, ended March 31, 2022, increased 28.8% year-over-year to $809 million. The company’s operating income came in at $117 million, up 34.5% from the prior-year period. While its adjusted net income increased 76.5% year-over-year to $60 million, its adjusted EPS grew 76.9% to $0.69. The company had $381 million in cash and cash equivalents as of March 31, 2022.
Analysts expect the company’s EPS to hit $4.52 for its fiscal 2022, ending Dec. 31, 2022, representing a 23.8% rise from the prior-year period. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $3.61 billion for the same fiscal year represents a 15.1% year-over-year improvement. Its EPS is expected to grow at 25.8% per annum over the next five years. Over the past week, the stock has gained 8.2% in price to close yesterday’s trading session at $51.24.
TNL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Value and Quality. Click here to see the additional ratings for TNL (Stability, Momentum, Sentiment, and Growth).
TNL is ranked #4 in the C-rated Travel - Hotels/Resorts industry.
Bluegreen Vacations Holding Corporation (BVH)
BVH in Boca Raton, Fla., markets and sells vacation ownership interests (VOI) and manages resorts in popular leisure and urban destinations. The company provides resort management, mortgage servicing, title services, construction design, development services, financing to qualified VOI purchasers, and management services to vacation clubs and homeowners’ associations.
For its fiscal year 2022 first quarter, ended March 31, 2022, BVH’s total revenues increased 33.3% year-over-year to $195.13 million. The company’s pre-tax income came in at $25.40 million, up 279.5% from its year-ago period. Its non-GAAP net income came in at $15.99 million, representing a 437.6% rise from the prior-year period. BVH’s EPS was $0.76, indicating a 406.7% year-over-year improvement. As of March 31, 2022, the company had $179.27 million in cash and cash equivalents.
Analysts expect BVH’s EPS to grow 34.8% year-over-year to $3.76 for its fiscal 2022 ending Dec. 31, 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. The $841.78 million consensus revenue estimate for the same fiscal year indicates an 11.2% year-over-year improvement. The company’s EPS is expected to grow at a 10% rate per annum over the next five years. Over the past week, the stock has gained 13.5% in price to close yesterday’s trading session at $27.59.
BVH’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and Sentiment and a B grade for Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for BVH’s Growth, Stability, and Momentum here.
BVH is ranked #1 in the C-rated Travel - Hotels/Resorts industry.
EXPE shares were trading at $129.91 per share on Tuesday afternoon, down $1.06 (-0.81%). Year-to-date, EXPE has declined -28.12%, versus a -12.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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