As the summer sun shines on Wall Street, so does the desire to profit from stocks that could benefit from increased travel around the world. According to the World Travel and Tourism Council (WTTC), 2024 is predicted to be a record year for travel and tourism, contributing $11.1 trillion to the global economy.
While the focus will be on the big conglomerates, there are also big opportunities in specific sectors such as booking platforms, recovering cruise operators and leisure travel. With this information, investors can take advantage of three summer travel stocks to capitalize on the booming travel boom.
Expedia (EXPE)
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First up on our summer travel stock list is the travel technology group Expedia (Nasdaq:experience). The company’s travel price aggregator and metasearch engine covers everything from hotels and flights to vacation packages and car rentals. Many readers will be familiar with the company’s portfolio of brands, which includes Expedia, Hotels.com, Vrbo, Orbitz, Travelocity and Trivago.
Expedia reported first-quarter 2024 revenue of $2.9 billion, up 8% year over year. Total bookings rose 3% year over year to $30.2 billion, driven by a 12% increase in hotel bookings. Adjusted EPS improved to 21 cents from a loss of 20 cents last year, but the company lowered its full-year guidance due to challenges at vacation rental marketplace Vrbo.
Despite forecast cuts and a sudden CEO change weighing on the stock price, Expedia’s future looks bright amid favorable travel trends. CBRE Group (New York Stock Exchange:CBRE) highlights the travel industry’s strong fundamentals and GDP growth, which is expected to drive U.S. revenue per room (RevPAR) growth in the second half of 2024. Cathay Pasific Airlines (OTCMKTS:CPCAYExpedia’s new promotion for its travel booking platform, Cathay Holidays, highlights the company’s commitment to enhancing customer experience.
EXPE shares are down about 15% since the start of 2024. The stock is trading at favorable valuation levels of 11 times forward earnings and 1.5 times sales. Analysts have a 12-month price target of $140.00 for EXPE shares, indicating an upside potential of 8% from current levels.
Norwegian Cruise Line (NCLH)
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Next up, from today’s top summer travel stocks: Norwegian Cruise Line (New York Stock Exchange:National Health CenterThis leading cruise line operates three subsidiaries: Norwegian, Oceania and Regent Seven Seas. Its fleet of approximately 30 ships serves destinations around the world, including Scandinavia, the Mediterranean, Alaska and the Caribbean.
In May, Norwegian Cruise Line reported strong first-quarter 2024 results. Revenues rose 20% year over year to $2.2 billion. Record bookings and strong 12-month outlook led to higher prices and occupancy rates. This helped the company turn a loss of $127.7 million into a net income of $69.5 million. Adjusted diluted EPS increased to 16 cents from a loss of 30 cents.
Recently, Norwegian moved its primary land-based operations to Amazon Web Services (AWS) to take advantage of AWS’s capabilities. Investors are hopeful that this move will better optimize operations and allow the company to capitalize on growing demand for cruise vacations. In fact, global cruise capacity is expected to grow 10% from 2024 to 2028.
However, NCLH shares are down about 5% this year. The company’s shares are trading at an attractive valuation of 14 times forward earnings (P/E) and 0.9 times forward sales (P/S). Wall Street has an average 12-month price forecast of $20.14 for NCLH, suggesting room for upside of more than 7%.
Travel + Leisure (TNL)
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Travel Media Brands Travel + Leisure (New York Stock Exchange:TNL) concludes our look at summer travel stocks today. A leader in the membership and leisure travel industry, TNL has a diverse portfolio of nearly 20 resort, travel club and lifestyle travel brands. The network offers all-inclusive resorts with brands such as Club Wyndham and vacation exchange programs with RCI to cater to a variety of vacation styles and budgets.
In the first quarter of 2024, TNL got off to a strong start with a 15% increase in tour count, a 28% increase in new owner tours and transaction volume exceeding $3,000 per guest. Revenues increased 4.2% year over year to $916 million. Adjusted diluted EPS increased 9% year over year to 97 cents. Vacation Ownership revenues increased 6%, while Travel and Membership Transactions decreased 4%.
Recently, Travel + Leisure has Allegiant Air (Nasdaq:Argut) has 15 million loyalty members. The move will enable TNL and Allegiant to offer targeted promotions, potentially spurring growth for both companies.
TNL shares have risen nearly 20% so far this year and offer a high dividend yield of 4.3%. Currently trading at 8.3 times forward earnings and 0.9 times sales, the stock looks undervalued. Finally, analysts see room for 16% upside for TNL shares, with a median 12-month price target of $54.00.
As of the date of publication, Tezcan Gecgil 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 author and are subject to InvestorPlace.com’s publication guidelines.
As of the publication date, the responsible editor (directly or We do not indirectly hold any positions in the securities described in this section.
