Time to Buy These Highly-Ranked Travel-Related Stocks
With the summer months upon us, many travel-related stocks are poised to rise with pent up-demand lingering from the pandemic.
Some of the beneficiaries include airlines, cruise ships, travel agencies, hotels, and vacation rentals. These travel-related companies are contributing to the strong performance of the top-rated Zacks Leisure and Recreation Services Industry which is in the top 23% of over 250 Zacks industries.
Year to date the Zacks Leisure and Recreation Industries collective total return including dividends is +29% to easily top the S&P 500’s +14% and roughly match the Nasdaq’s strong performance.
Let’s take a look at three highly-ranked stocks in the industry that currently boast a Zacks Rank #1 (Strong Buy).
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Bluegreen Vacations (BVH)
Starting out is Bluegreen Vacations which is a holding corporation that operates as a vacation ownership company. Bluegreen's markets and sells vacation ownership interests and manages resorts in leisure and urban destinations.
What stands out about Bluegreen stock is its price-to-earnings valuation at 8.3X forward earnings despite shares of BVH already up +37% YTD. This is reason to believe Bluegreen’s strong performance could continue as BVH still trades at a considerable discount to the industry average of 21.7X and nicely beneath the S&P 500’s 20.1X.
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Furthermore, earnings estimates have trended higher over the last 60 days offering further support. Trading at $34 a share, Bluegreen’s earnings are now forecasted to climb 17% this year and jump another 14% in FY24 at $4.65 per share.
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Royal Caribbean Cruises (RCL)
Taking the crown among cruise liners is Royal Caribbean. Increased bookings amid pent-up demand lingering from the pandemic is starting to reiterate the cruise company’s massive earnings potential.
In addition to its Zacks Rank #1 (Strong Buy) Royal Caribbean also has an “A” Style Scores grade for Growth. In correlation to strong booking demand, Royal Caribbean’s fiscal 2023 earnings estimates have soared 46% over the last 60 days with FY24 EPS estimates rising 21%.
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Royal Caribbean’s pandemic hiatus is behind it with annual earnings now projected to skyrocket to $4.71 per share compared to an adjusted loss of -$7.50 a share in 2022. Plus, fiscal 2024 earnings are expected to climb another 44% at $6.79 per share.
More importantly, this year’s anticipated sales of $13.13 billion would be up 48% from last year and also eclipse 2019 pre-pandemic sales of $10.95 billion by 20%. At $94 a share, Royal Caribbean’s P/E valuation of 19.8X forward earnings is sitll below the industry average and the benchmark.
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Trip.com (TCOM)
Rounding out the list is travel service company Trip.com. Based in Shanghai, Trip.com is a viable option to get exposure to high travel demand in and out of China.
With China reopening its economy earlier in the year, Trip.com is back on the path to being one of the more recognizable global online travel companies. Trip.com’s product offerings include flights, discount hotels, and train tickets along with service support and reviews.
Notably, earnings are forecasted to soar 334% this year at $1.26 per share compared to EPS of $0.29 in 2022. Fiscal 2024 earnings are projected to leap another 56% at $1.96 per share.
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Similar to Royal Caribbean, Trip.com’s top-line recovery is intriguing. Sales are forecasted to climb 88% this year to $5.53 billion and surpass 2019 pre-pandemic sales of $5.12 billion.
While Trip.com’s P/E valuation of 29.3X is above the industry and benchmark, the company may start to command a premium again for its travel services and operations in one of the world''s most populous countries.
With that being said, earrings estimate revisions have also trended higher throughout the quarter and the average Zacks Price Target suggests 25% upside from current levels of around $36 a share.
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Bottom Line
With these travel-related companies garnishing much momentum as we progress through the summer now appears to be an ideal time to buy their stocks. Rising earnings estimates have continued to confirm travel demand remains high and Bluegreen, Royal Caribbean, and Trip.com’s stock appear to be poised for more gains.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Trip.com Group Limited Sponsored ADR (TCOM) : Free Stock Analysis Report
Bluegreen Vacations Holding Corporation (BVH) : Free Stock Analysis Report
