It’s that time of year again: summer, when U.S. travel companies experience their busiest months due primarily to increased planned vacations among consumers.
Airline fares during the month of May fell by 6% compared to a year ago, which could lead to an increased number of passenger airline ticket sales, especially during this very busy time of year.
Travel demand gradually increased year over year, with 2024 being the year that demand is projected to surpass 2019 levels. This increase in consumer spending directly related to travel could be very profitable for businesses such as airliners, hospitality management, and other travel-related stocks.
These travel stocks listed below all trade at a fair valuation, represented by forward price-to-earnings ratios, and offer potential upside in the long-term growth for investors.
SkyWest (SKYW)
SkyWest (NASDAQ:SKYW) is a regional airline with a fleet of approximately 500 aircraft. It offers passenger and cargo transport, aircraft leasing, and on-demand charters.
Its share price increased steadily over the past year, more than doubling, while other airline companies, such as American Airlines (NASDAQ:AAL) and United Airlines (NASDAQ:UAL), reported a decline in their overall share prices during the same period.
On April 25, SKYW reported earnings for the first quarter of 2024, stating that total revenue increased by 16%. A net loss of $22 million was reported for Q1 2023, and it shifted to a net income of $60 million for Q1 2024.
SKYW beat most recent analyst predictions for its earnings results. It is still trading at a fair valuation, with its forward P/E ratio being 11.8x and its sector average of 18.4x.
SkyWest is an outlier among passenger airline stocks due to its rapid growth over the past year. Travel demand will continue to grow, offering more opportunities for SKYW’s continued success.
Travel + Leisure (TNL)
Travel + Leisure (NYSE:TNL) is a leading provider of hospitality and travel products. It offers vacation ownership opportunities for its customers, as well as travel membership programs and vacation rentals.
On April 24, Travel + Leisure reported earnings for the first quarter, stating that total revenue increased by 4% year-over-year and earnings per share increased from 81 cents per share in Q1 2023 to 91 cents per share in Q1 2024.
Over the past year, its share price has increased by 16%. It also offers investors a solid dividend yield of 4.5% on an annual basis. Its most recent quarterly distribution was 50 cents per share on June 13.
It also has a decent valuation with a forward P/E ratio of 8x, while the average among companies within the same sector is 15.5x.
TNL offers investors consistent earnings growth supplied by vacation ownership interest and other membership programs.
Copa Holdings (CPA)
Copa Holdings (NYSE:CPA) is a regional airline with a fleet of 100 aircraft that services approximately 32 countries in North America, South America and the Caribbean.
Copa has reported a rise in its total passenger ticket sales, and it saw an increase of 7% in capacity for May, along with a strong dividend yield of 5.2% annually. Its most recent quarterly distribution was $1.61 per share on June 14.
On May 15, CPA reported earnings for the first quarter of 2024, stating that total revenue increased by 3% and net income rose by 45% compared to the previous year.
Copa Holdings is trading at a decent valuation with a forward P/E ratio of 5.6x, while the median sector forward P/E is 18.44x.
CPA’s share price has fallen by 12% over this past year, but with an increase in ticket sales and Q1 results that beat analyst expectations, it could easily be a winner for investors in the long term.
As of this writing, Noah Bolton 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.
