6 Travel Stocks That Present a Buy and Hold Opportunity - 1 of 6

#1 - Booking Holdings (NASDAQ:BKNG)

One of the arguments against buying shares of Booking Holdings (NASDAQ:BKNG) is that the stock may not be as much of a bargain since it only fell about 35% at its low point. However, a better argument may be that Booking only had about $1.6 billion of prepaid bookings prior to the pandemic. That was significantly less than peers such as Expedia (NASDAQ:EXPE) and Airbnb. Less prepaid bookings means less money to refund to consumers.

 There is some speculation that a prolonged travel slump may make it more difficult for Booking to meet some 2021 debt obligations. However, forecasting what the economy may be like 18 months from now is a fool’s errand. In the short term, Booking looks has a strong cash position. At the end of 2019, the company had $7.3 billion in cash and marketable securities. And unlike other travel companies, Booking is not facing the issue of airplanes that are sitting idle or entire hotels sitting empty.

According to SunTrust Robinson Humphrey analyst Naved Khan, Booking’s low fixed-cost model and recent cost-cutting initiatives could allow the company to survive an entire year with no revenue. It certainly should allow the company the ability to run at zero cash burn if revenue drops 50% to 60%. 

And Booking also represents some light at the end of the tunnel for other reasons. The company’s CEO, Glenn Fogel was diagnosed with Covid-19, the disease caused by the coronavirus, in late March. However, Fogel was asymptomatic and appears to have recovered and was able to carry on with his duties while in the 14-day window of the virus progression.

About Booking

Current Price

$5,097.97

Consensus Rating

Moderate Buy

Ratings Breakdown

22 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.

Consensus Price Target

$4,785.00 (6.1% Downside)