The travel industry is booming, and Memorial Day weekend was proof that Americans are ready to pack their bags and fly away! Travel stocks are ready to rally, and companies have rebounded after the slow pandemic period. Now is the time to consider buying travel stocks. Travel agency AAA forecasted 43.8 million people traveling at least 50 miles for the Memorial Day weekend, up from 38 million in 2019.
This highlights the rebound in travel this year, and I believe it will continue throughout 2024. Earlier, a survey showed that 82% of Americans planned to travel this year, and among them, 42% planned to take multiple trips. With travel spending set to increase this year, now is a great time for investors to buy travel stocks for serious gains. Several other companies will benefit from the travel boom, from the airlines to hotels. With that in mind, let’s take a look at the three travel stocks to buy.
Travel Stocks To Buy: Airbnb (ABNB)
Trading at $146 and up 8% year-to-date, Airbnb (NASDAQ:ABNB) is a steal at the current price. While it is up 8% since Jan, it has lost most of its value in the past month. With the unleashing of pent-up travel demand, Airbnb is the first to benefit. Giving stiff competition to hotels, Airbnb runs an asset-light model that finds success as the travel industry picks up.
It beat expectations in the first quarter and reported a revenue of $2.14 billion, up 18% year-over-year, and the EPS came in at 41 cents. The profit soared 126% YOY, which was the company’s best first quarter ever. The company saw a 12% YOY jump in gross bookings, which stood at $22.90 billion. Despite the strong numbers, investors weren’t happy with the guidance, leading to a stock drop.
Airbnb reported an impressive first quarter despite not being a traditional holiday period, which means the ongoing and upcoming quarters could be even better due to the Memorial Day weekend and the forthcoming summer holidays. Its numbers are a testament to the company’s growth and its soaring popularity amongst travelers. This is one of the best travel stocks to own before the holiday period begins.
Analysts are optimistic about the stock’s future, and many have recently raised the price target. Strong revenue and earnings growth will drive ABNB stock higher.
Delta Airlines (DAL)
United States-based Delta Air Lines (NYSE:DAL) has already benefitted from the pent-up travel demand, and its numbers show that it is one of the best airlines today. It has an extensive domestic route and also offers international services to East Asia, Western Europe, and Latin America.
The company beat expectations in the first-quarter results. Its operating revenue came in at $12.6 billion, up 6% YOY, and the earnings per share stood at $0.45. For the second quarter, it is aiming for growth in the range of 5% to 7% compared to the prior year, with an EPS of $2.20 to $2.50. It saw a strong demand for leisure and business travel bookings.
Delta swung from a loss in the first quarter of 2023 to a profit this year and has set a strong momentum for the second half of the year. With summer approaching, Delta is set to have better days ahead. Despite inflation, people are willing to spend on travel, and the Memorial Day weekend numbers are proof that summer will be busy for travel companies.
Trading at $50, Delta stock looks undervalued to me at the current level. While it is up 25% YTD, there is still a long way to go. It is close to the 52-week high of $53 but can keep soaring higher over the coming months. Delta also enjoys a modest dividend yield of 0.79%, making it attractive for passive income investors.
Marriott International (MAR)
A global giant and one of the most well-established hospitality companies, Marriott International (NASDAQ:MAR) is set to capitalize on the upcoming peak travel demand. The numbers have shown solid growth, with a 4.3% rise in global revenue per room and a 4% jump in the average daily rate. While it slightly missed EPS expectations, it beat revenue expectations with $5.98 billion in revenue for the first quarter.
Marriott’s strength lies in its successful global operations. It is steadily expanding and has added 46,000 rooms to end the quarter with 1.6 million rooms. It has also committed to grow its European presence and wants to add 100 properties and 12,000 rooms by 2026. Management also rewards shareholders through dividends and share buybacks.
The company is financially strong enough to achieve the expansion goals without compromising on the dividends. It raised the quarterly dividend by 21% to $0.63 per share. Trading at $228, the stock is up 2% YTD and 28% in the past 12 months. MAR stock is a slow and steady mover with a dividend yield of 1.10%.
Driven by strong results, the management raised the outlook and aims for an adjusted EPS between $9.31 and $9.65 for the full year.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
