A record-breaking number of Americans will be traveling away from home to celebrate Independence Day this year. The surge in travel count will likely be backed by cheaper gas prices, low rate of unemployment and robust consumer outlays. This calls for investing in the travel space.
Jul 4 to See Record Travel
According to a forecast from auto club AAA, a record number of travelers are projected to travel 50 miles or more. A total of almost 49 million travelers are expected to take a trip this Independence Day, reflecting an increase of 4.1% from last year. This will mark the most-travelled Independence Day since AAA started tracking numbers.
Almost 41.4 million travelers are expected to drive, showing an increase of 4.3% over last year’s Independence Day. Travel by cruises, trains and buses are expected to increase 0.6% to 3.55 million. And nearly 3.96 million leisure travelers will take to the skies, which is 5.3% higher than the year-ago level.
Busy Summer Air Travel Season
Independence Day travel is poised to be the busiest for holidaymakers, adding to the already lively summer air travel season. The industry trade organization, Airlines for America (A4A), recently announced that a record 257.4 million passengers are anticipated to fly this summer, up 3.4% from 248.8 million commuters last summer, which was a record high.
What’s more, on average, a solid 2.8 million Americans will be flying every day, especially from Jun 1 to Aug 31. And that is almost 93,000 more per day, compared to the same time frame last year. By the way, at the peak of travel period, between Jul 20 and Aug 10, it’s expected that nearly 3 million people will be flying on a daily basis.
This year will in fact mark the 10th successive year of an increase in passenger count during summer. And to handle the higher demand, carriers have added nearly 111,000 seats per day than a year ago. Such high supply is expected due to stuffing more seats in existing planes as well as expanding the capacity of new commercial fleet.
What’s Driving Travel This Independence Day?
Lower gas prices have been a key catalyst. The national average price for a gallon of gas stands at $2.66, which is 19 cents less than this time last year. In fact, AAA gas price expert Jeanette Casselano added that “gas prices are, on average, 17 cents cheaper than Memorial Day weekend.” Lower gas prices, thus, no doubt will be a major contributing factor toward the increase in road travelers this Independence Day.
In addition to lower gas prices, strong economic fundamentals are encouraging more Americans to travel this Independence Day. Consumer outlays are off to a firm start of late. The pickup in consumer spending is mostly due to steady wages gain and unemployment rate remaining at the lowest level in half a century. The average wage paid to American workers went up 6 cents to $27.83 an hour in May. Wage growth over the past 12 months was 3.1%.
The unemployment rate, in the meanwhile, was near a 49-year low of 3.6%. The broader measure of joblessness that includes part-time workers, better known as the U6 rate, slipped to its lowest level in 19 years.
5 Top Travel Picks
Cheaper gasoline prices, an upbeat labor market and uptick in consumer spending are prompting more number of people to plan a holiday this Independence Day. Given the factors, travel and leisure stocks are set to break records this summer. We have, thus, selected five such stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
JetBlue Airways Corporation JBLU, a passenger carrier company, provides air transportation services. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 4.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 23.9%, higher than the Transportation - Airline industry’s estimated rally of 15.4%.
Hertz Global Holdings, Inc. HTZ provides airport and off-airport vehicle rental and leasing services. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 56.9% over the past 60 days. The company’s expected earnings growth rate for the current quarter is 152.6% compared with the Transportation - Services industry’s estimated decline of 6.9%.
SeaWorld Entertainment, Inc. SEAS operates as a theme park and entertainment company in the United States. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 19.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 184.6%, higher than the Leisure and Recreation Services industry’s expected rally of 15.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wyndham Destinations, Inc. WYND operates as a vacation ownership and exchange company in the United States. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 1.3% over the past 90 days. The company’s expected earnings growth rate for the current year is 14.9%, slightly higher than the Hotels and Motels industry’s projected rally of 14.6%.
Red Lion Hotels Corporation RLH operates as a hospitality and leisure company the United States. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 1% upover the past 60 days. The company’s expected earnings growth rate for the current quarter is 130% compared with the Hotels and Motels industry’s estimated decline of 2.5%.
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