Will you be taking a trip this summer? Taking some time off of work to be with family? Planning to have a cookout or two? Whatever your summer plans may be, we know for sure what the market trends indicate: A massive increase in travel and leisure spending is expected this year.
Restaurants, hotels, and cruise lines are already experiencing a surge in bookings. According to the Wall Street Journal, this time last year, 40% of people polled had avoided traveling by airplane, train, or bus. Now, that number has dropped to just 18%. Also, roughly 42 million people made trips of 50 miles or longer during Memorial Day weekend. If you’re going to invest in this market space, now is the time!
I’ve found travel stocks that are buy-rated and attractive to investors. Click here to know why:
United Airlines Holdings Inc (UAL)
A recent report suggests that the potential 2023 recession will have a less severe impact on airlines. United Airlines (UAL) showcases its confidence in this by recently announcing plans to hire 50,000 workers in the next two years, despite so many workforce reductions elsewhere. UAL has impressively maintained the lowest flight and seat cancellation rates among U.S. airlines. Analysts project a substantial 270% increase in the company’s full-year bottom line, reaching $9.30 per share. I found this cool tidbit too: An executive recently described this year’s summer travel season as UAL‘s “Super Bowl.”
UAL is up by 32.31% year-to-date, showing excellent TTM metrics to make sense of it: it has a PEG (price/earnings/growth) ratio of 0.13x, a P/S (price to sales) ratio of 0.33x, a P/B (price to book) ratio of 2.43x, and a 37.31% ROE (return on equity). UAL shows TTM revenue of $48.8 billion at $5.73 per share, from which it made $1.92 billion in net income. At its most recent earnings call, UAL beat analysts’ EPS forecast by 14.17%, also showing year-over-year growth in crucial areas like revenue (+51.06%), net income (+85.91%), net profit margin (+90.66%), and operating income (+100.29%). UAL is expected to report $13.9 billion in sales at $3.88 per share for the current fiscal quarter. With an operating free cash flow of $7.73 billion and a 10-day average volume of 5.67 million shares, UAL has a median price target of $65, with a high of $80 and a low of $43. UAL’s new range represents anywhere from a 30 to 60% jump from where pricing currently sits. UAL has 13 buy ratings and 7 hold ratings.
O’Reilly Automotive Inc (ORLY)
In today’s expensive flight landscape, more families are opting for road trips, leading to an increased demand for car repairs. O’Reilly Automotive (ORLY) has capitalized on this trend. Showcasing impressive momentum and exhibiting low volatility, ORLY has shown remarkable 41% growth over the past year. This upward trajectory for ORLY has been steady and consistent, surpassing even the returns of renowned companies like Amazon (AMZN), Tesla (TSLA), and Apple (AAPL). If you’re seeking an alternative approach to benefit from the summer travel stock trend, ORLY emerges as a solid and promising option. I don’t often recommend high-priced stocks like this, so I’ll let the numbers back me up.
ORLY has a safe 0.88 beta score, is up by 7.40% year-to-date, has a PEG ratio of 1.50x, and a stunning ROE (return on equity) of 5,863.87%. ORLY shows $14.82 billion in TTM revenue at $33.93 per share, from which it profited $2.21 billion on the back of its 14.90% net margin. For its last earnings call, ORLY reported $8.28 per share vs. the $8.03 per share expected by analysts (a 3.61% surprise) and $3.71 billion in revenue vs. the $3.58 billion expected (a 3.43% surprise). ORLY shows year-over-year growth in areas such as revenue (+12.50%), net income (+7.26%), and EPS (+15.48%). ORLY is forecasted to show $4 billion in sales at $10.00 per share for the current fiscal quarter. With $1.84 billion in free cash flow and a 10-day average volume of roughly 560,000 shares, ORLY’s median price target is $987.50, with a high of $1,055 and a low of $865, allowing for a 16.5% upside. ORLY has 17 buy ratings and 9 hold ratings.
Expedia Group Inc (EXPE)
One business that indeed thrives on strong travel demand is Expedia Group (EXPE). The travel-booking platform is on top of this in a couple of ways: First, EXPE recently added hotels.com to its portfolio, along with the VRBO platform for vacations and BnB lodging. Secondly, and more importantly, EXPE has wisely been incorporating AI into its app through a partnership with Microsoft (MSFT), launching its own plug-in for ChatGPT. This enables EXPE to provide customers with price comparisons, facilitate shopping comparisons, assist with self-service queries, and enhance the efficiency of customer service agents.
EXPE’s stock is up 22.93% year-to-date. With $12.08 billion in TTM revenue at $2.09 per share, EXPE made a net income of $329 million via its modest 2.72% profit margin. EXPE boasts a forward P/E (price to
earnings) ratio of 11x, a PEG ratio of 0.58x, a P/S (price to sales) ratio of 1.45x, and an ROE (return on equity) of 16.83%. EXPE shows forward-looking 1-year EPS growth of 38.8% and is forecasted to show $3.4 billion in sales at $2.32 per share for the current fiscal quarter. With a free cash flow of $2.58 billion and a 10-day average trading volume of 3.01 million shares, EXPE has a median price target of $120, with a high of $172 and a low of $90. This new range for EXPE allows room for an almost 60% price jump from its current position. EXPE has 15 buy ratings and 15 hold ratings.
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