The resurgence of travel and tourism post-pandemic has been impressive, with international tourism revenues reaching $1.4 trillion last year, nearly back to pre-pandemic levels. This growth, coupled with an optimistic outlook for 2024, signals a strong year ahead. Possible rate cuts could further enhance global economic conditions, boosting the travel industry even more.
Interestingly, despite broader economic uncertainties, consumers continue to prioritize spending on travel experiences. Recent decreases in travel-related costs—airfares, car rentals, and hotels—offer an appealing entry point for consumers and investors alike. This environment creates a fertile ground for targeted investments.
In our latest feature, we explore three travel stocks that are uniquely positioned to benefit from these trends. These companies are not just adapting but excelling, showing potential for significant gains by 2025.
MakeMyTrip (NASDAQ:MMYT) – Positioned for Growth in India’s Travel Boom
MakeMyTrip has seen an impressive 47% rally over the last 12 months, bouncing back from what many considered deeply oversold levels. This surge is not just a rebound but a reflection of the substantial growth potential in the Indian tourism market. As one of the fastest-growing economies with a burgeoning middle class, India’s travel sector is on the brink of a significant expansion.
Forecasts suggest that Indian travelers will undertake five billion more trips by 2030, with spending in the tourism sector expected to reach $410 billion by the decade’s end. This presents a massive opportunity for MakeMyTrip, which already holds a leading position in the Indian online travel market.
Post-pandemic, the company has shown a sustained improvement in operating margins, a trend that is expected to continue alongside its growth. This financial health positions MakeMyTrip as a potential multi-bagger stock, poised for accelerated growth as more Indians turn to online platforms to book their travels. As the landscape of Indian travel evolves, MakeMyTrip stands ready to capitalize on this trend, making it an intriguing pick for investors looking towards the future of travel.
Expedia Group (NASDAQ:EXPE) – Strong Growth Prospects in Online Travel
Expedia Group has emerged as one of the most undervalued stocks in the tourism sector. Despite rallying 41% in the last six months, it still trades at an attractive forward price-earnings ratio of just 11. Given its solid performance and the likelihood of strong quarterly results continuing, I am bullish on EXPE’s potential to double by the end of 2025.
Operating as a leading online travel company, Expedia Group has a significant global presence. The company experienced its highest ever fourth-quarter revenue in Q4 2023, underscoring a robust post-pandemic recovery. For the full year, revenue climbed by 10% to $12.8 billion, while adjusted EBITDA rose by 14% to $2.7 billion, indicating strong operational leverage and potential for further EBITDA margin expansion this year.
Expedia has also been proactive in expanding its global travel ecosystem, adding new partners and enhancing its service offerings. These strategic moves, combined with favorable industry trends, position Expedia to accelerate its growth in the near future. This backdrop makes EXPE a compelling investment opportunity for those looking to benefit from the ongoing recovery and growth in the travel industry.
Corporacion America Airports (NYSE:CAAP) – Dominant Player in Emerging Markets
Corporacion America Airports, with its extensive network of 52 airports and a service reach to over 81.1 million passengers annually, stands as a major force in the airport operation sector, particularly in South America. Its significant operations span from Buenos Aires, a major hub in Argentina, to other strategic locations in Brazil, Italy, Armenia, and beyond, making CAAP a pivotal player in global aviation.
The company’s financial performance has been exemplary, consistently outperforming the sector with robust profit margins and impressive returns on equity. This success is partly attributed to the inherent advantages of being an airport operator, such as the natural monopoly in certain regions and relatively low operational costs.
Recently, CAAP announced a modest year-over-year increase in passenger traffic of 0.8% for March 2024, signaling steady growth prospects. Despite a 50% surge in its stock price over the past six months, CAAP still trades at a compelling valuation of 11.31 times trailing twelve-month earnings. This combination of strategic market position, solid financials, and reasonable valuation makes Corporacion America Airports an attractive stock for investors looking at robust infrastructure plays in emerging markets.
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