The 7 Most Promising Travel Stocks to Buy Before the Boom
Almost three years ago today, the mysterious SARS-CoV-2 virus began spreading across the globe, utterly guaranteeing the destruction of travel stocks to buy. Indeed, airports became veritable ghost towns as few people wanted to be stuck in a flying tube with strangers. Fortunately, with the distribution of Covid-19 vaccines, society everywhere began gradually normalizing.
Moving forward, one of the biggest catalysts for travel stocks to buy centers on the reopening of China. For the longest time, government officials there imposed a draconian zero-Covid policy. However, with the world’s second-largest economy gradually integrating back into the global network, circumstances bode well not only for vacationers but for commerce as a whole.
Just as importantly, industry experts project a rebound in business travel this year. With loosened restrictions everywhere, such a forecast isn’t surprising. Moreover, major enterprises recently put an end to remote work, likely inspiring other businesses to do the same. Collectively, this dynamic supports in-person interactions, which in turn may bolster the below travel stocks to buy.
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Delta Air Lines
Delta Air Lines (DAL)
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With most of the world ready to put behind it the disaster of the Covid-19 pandemic, Delta Air Lines (NYSE:DAL) may be one of the best travel stocks to buy. Primarily, fears of the SARS-CoV-2 virus faded significantly. As well, with multiple travel destinations now fully open, people have a reason to fly the (relatively) friendly skies.
However, Delta may have an edge compared to other U.S. carriers because of the business travel implications. According to Small Business Trends, Delta represents the best airliner for business travel. This lofty status takes into account stats such as the infrequency of mishandled baggage and creature comforts such as ease of reservations and check-ins.
To be sure, Gurufocus.com warns investors that DAL rates as a possible value trap. However, I believe this warning appeared based on the hard numbers and not their context. For a more relevant view, consider Wall Street analysts, who peg DAL as a consensus strong buy.
United Airlines (UAL)
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While Delta may be in the driver’s seat when it comes to airlines-related travel stocks to buy, it’s not the only compelling idea. For those seeking to bank on the rise in vacationing demand, investors should look into United Airlines (NASDAQ:UAL). Featuring an enviable partner network, United offers extensive options for those finally able to take that long-delayed vacation.
Fundamentally as well, experts project that the underlying industry should return to profitability this year. Again, Covid fears faded substantially into the background. Moreover, with major tourist destinations such as China and Japan reopening over the past few months, international-flight demand should blossom. Therefore, investors shouldn’t be terribly concerned about poor financial metrics. Over time, these stats should normalize.
Just as importantly, Wall Street analysts have an optimistic view of United, pegging its shares as a consensus moderate buy. In addition, their average price target stands at $56.60, implying an upside potential of over 16%. Thus, UAL ranks among the travel stocks to buy.
Hilton Hotels (HLT)
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Because of consumer-related challenges – particularly skyrocketing inflation throughout 2022 – mentioning Hilton Hotels (NYSE:HLT) might seem imprudent. After all, we’re talking about a premium brand among travel stocks to buy. Still, HLT deserves another look. Fundamentally, it could end up surprising some folks.
For one thing, the negativity in media headlines overlooks that certain people did very well during the Covid-19 pandemic. It’s not just my opinion – it’s hard data. With the wealth gap widening, the global health crisis effectively put more money into the hands of the rich. Therefore, those consumers of means are seriously loaded, boding well for Hilton Hotels.
On another level, consumers of more modest means effectively put off their vacation plans for three years. By logical deduction, the magnitude of cabin fever may have accelerated. So, it wouldn’t be out of the question for consumers to splurge, again potentially benefitting Hilton. Finally, HLT features a consensus moderate buy view. Thus, it’s worth considering HLT as one of the top travel stocks to buy.
Choice Hotels (CHH)
Another idea to consider among travel stocks to buy would be Choice Hotels (NYSE:CHH). Representing one of the largest hotel chains in the world, Choice owns several upscale brands. However, it also specializes in more economical offerings, likely to draw favor among a range of travelers. That’s going to be important as societies gradually recover from the health crisis and economic headwinds.
To be sure, CHH suffered many downsides throughout 2022. And in the trailing year, shares stumbled over 13%. Another factor that investors should watch out for centers on analysts’ assessment. Per TipRanks, experts rate Choice as a consensus moderate sell with a price target that implies 5% downside. However, since the January opener, CHH gained nearly 13% of its equity value.
On the financial end, Choice absorbed damage but should hold up well as sector sentiment improves. For instance, its three-year free cash flow growth rate stands at 17%, beating out over 62% of the competition. Also, it’s a very profitable enterprise, beating out 90% of its rivals across key performance indicators.
Wynn Resorts (WYNN)
A Las Vegas-based powerhouse, Wynn Resorts (NASDAQ:WYNN) is one of the travel stocks to buy that couldn’t wait for the Covid-19 crisis to fade. During the first year of the pandemic, historical visitations fell by more than half compared to recent pre-pandemic years. As well, Wynn’s Macau properties suffered badly due to severe Covid restrictions in the region.
However, with the world now on the same page regarding economic reopening, WYNN ranks among the travel stocks to buy. Indeed, the bulls already stepped up to the plate, with WYNN shares gaining over 20% since the January opener. Further, in the trailing six months, shares shot up over 62%.
Currently, Wall Street analysts peg WYNN as a consensus moderate buy. In addition, although hedge funds exited exposure to the casino and resort in earlier years, TipRanks now reports that sentiment among this class of institutional investor rates as positive. With China being the prior headwind that’s now fading into the background, WYNN can really fly.
Hertz Global (HTZ)
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Back during the worst of the Covid-19 crisis, the bankruptcy of Hertz Global (NASDAQ:HTZ) symbolized the devastation of the pandemic. However, management now seeks to put that awful time behind it. With the world pushing forward toward the usual way of doing things before the SARS-CoV-2 virus interruption, Hertz now enjoys a fundamental tailwind.
For one thing, with business travel projected to increase significantly compared to 2022 levels, Hertz should benefit from increased demand. As well, vacationers will likely see much benefit from its core rental car service. Better yet, investors appear to carry strong confidence in this broader narrative. Since the January opener, HTZ gained 17% of its equity value.
Further, Wall Street analysts rate HTZ as a consensus moderate buy. Their average price target stands at $20.33, reflecting nearly 16% upside potential. To be fair, it’s a risky idea. However, the emerging relevance could make it one of the travel stocks to buy.
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Consistently unprofitable quarter after quarter, ride-sharing giant Uber (NYSE:UBER) presents one of the riskiest propositions among travel stocks to buy. However, it also managed to be fundamentally relevant throughout the pandemic. When people stopped ordering rides during the crisis, the company’s food-delivery service Uber Eats gained prominence.
Of course, it’s difficult to ignore the troubles the company faced in 2022. During the trailing year, UBER gave up nearly 19% of its equity value. Since making its public market debut, shares fell nearly 27%. At the same time, travel sentiment improvements should help engineer upside for UBER. Indeed, since the January opener, the stock moved up almost 20%.
Even though the net losses contributed to Gurufocus.com warning its users that UBER poses a threat as a possible value trap, Wall Street analysts would beg to differ. They view the ride-sharing platform as a consensus and unanimous strong buy. As well, their average price target of $44.83 implies nearly 48% upside potential.
On the date of publication, Josh Enomoto did not have (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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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