There's good news and bad news for those interested in investing in travel stocks in 2024. A report from Skift Research issued in January explains why the red-hot growth investors have come to expect is coming to an end. It seems that revenge travel may have ended as consumers, particularly in the low- and middle-income categories, pull back as inflation continues to wear on savings.
However, the good news is that normalization still means growth. Normalization means capacity growth and not just better pricing power for some industries, such as airlines and hotels.
This means it's a good time to consider which travel stocks may have room to run higher. Travel stocks cover a range of companies, from hotels to airlines to cruise ships to casinos to payment processors. We've got all of them covered and more in this special presentation that focuses on travel stocks that are likely to show growth in the next 12 months.
Quick Links
- Delta Air Lines
- Booking Holdings
- Viking Holdings
- Marriott International
- Caesar’s Entertainment
- Winnebago Industries
- Visa
#1 - Delta Air Lines (NYSE:DAL)
Delta Air Lines Inc. (NYSE: DAL) is one travel stock that can fit into any investor’s portfolio. By many accounts, Delta is simply the most well-run airline. The company took aggressive steps (and took on debt) to protect the bottom line in 2020. Those steps are paying off today as the company is seeing revenue and earnings return to 2019 levels. Delta is increasing free cash flow while purposefully paying down its debt.
One attribute that Delta has that many investors overlook is multiple revenue streams. In addition to its legacy business, the airline generates about 10% of its revenue from cargo. It generates an added 10% of revenue from its service business, which includes servicing airlines of other carriers.
And then there’s the company’s valuation. Delta trades at 7.99x forward earnings, and analysts have a consensus price target of $59.25, which offers an 11% upside. Plus, Delta reinstated its dividend in 2023 and will likely raise it in the coming quarters.
About Delta Air Lines
Delta Air Lines, Inc provides scheduled air transportation for passengers and cargo in the United States and internationally. The company operates through two segments, Airline and Refinery. Its domestic network centered on core hubs in Atlanta, Minneapolis-St. Paul, Detroit, and Salt Lake City, as well as coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK, and Seattle; and international network centered on hubs and market presence in Amsterdam, Bogota, Lima, Mexico City, London-Heathrow, Paris-Charles de Gaulle, Sao Paulo, Seoul-Incheon, and Tokyo.
Read More - Current Price
- $60.93
- Consensus Rating
- Buy
- Ratings Breakdown
- 14 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $75.83 (24.5% Upside)
#2 - Booking Holdings (NASDAQ:BKNG)
At first glance, Booking Holdings Inc. (NASDAQ: BKNG) may not look like an ideal candidate for a travel stock with upside. As of this writing, BKNG stock trades at over $3700 per share and over 21x forward earnings. It’s an expensive stock.
However, the company’s business model makes it a one-stop shop that helps travelers expedite their travel plans. Booking is adding AI capabilities into its platform for a more customized experience. And the company’s revenue and earnings continue to grow year-over-year, as does the company’s stock price, which is up more than 111% in the last five years.
That makes a stock split a viable possibility. At the moment, trading volume suggests that a split wouldn’t be helpful. But if there’s any sign of buying fatigue, a split could be a way to ensure the stock continues to grow.
About Booking
Booking Holdings Inc, formerly The Priceline Group Inc, is a provider of travel and restaurant online reservation and related services. The Company, through its online travel companies (OTCs), connects consumers wishing to make travel reservations with providers of travel services across the world. It offers consumers an array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through its Booking.com, priceline.com and agoda.com brands.
Read More - Current Price
- $5,048.59
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $4,909.90 (2.7% Downside)
#3 - Viking Holdings (NYSE:VIK)
In 2023, the cruise industry was fully operating once more. However, volume was still below 2019 levels. According to industry experts, that will change in 2024 when passenger volume is expected to exceed 2019 levels. Viking Holdings Ltd. (NYSE: VIK) takes a distinct approach to cruising that may be attractive to both travelers and investors.
The company's business model targets and caters to affluent travelers. For one thing, no children are allowed on board, and the cruise ships don't have casinos. It's a quieter experience geared toward people seeking destination-focused journeys.
Although the company has been operating since 1997, Viking only began life as a publicly traded company on May 1, 2024. There's not a lot of history for investors, but the company has a history of profitable operations. Viking will deliver its first earnings report in late May. If that confirms investors' expectations, look for analysts to get behind this stock in a big way.
About Viking
Viking Holdings Ltd engages in the passenger shipping and other forms of passenger transport in North America, the United Kingdom, and internationally. It operates through River and Ocean segments. The company also operates as a tour entrepreneur for passengers and related activities in tourism. As of December 31, 2023, it operated a fleet of 92 ships, including 81 river vessels comprising 58 Longships, 10 smaller classes based on the Longship design, 11 other river vessels, and 1 river vessel charter and the Viking Mississippi; 9 ocean ships; and 2 expedition ships.
Read More - Current Price
- $46.23
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 10 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $42.85 (7.3% Downside)
#4 - Marriott International (NASDAQ:MAR)
According to CBRE, RevPAR (revenue per available room) is supposed to increase by 3% in 2024. This was after reaching a record high in 2023. Marriott International Inc. (NASDAQ: MAR) is a solid pick if you're looking for travel stocks in the hotel niche.
The CBRE report cites international travel and increased convention traffic as key reasons for the expected increase in RevPAR. Marriott excels in both areas. As evidence, the company cited global RevPAR growth of 6% in the first quarter and said that RevPAR growth is consistent for all of its customer segments.
With a forward P/E ratio of 24x, MAR stock isn't necessarily cheap. That's reflected in the fact that analysts have a consensus Hold rating on the stock. However, analysts' expectations for 14% earnings growth could support higher stock prices, particularly if interest rates come down.
About Marriott International
Marriott International, Inc engages in operating, franchising, and licensing hotel, residential, timeshare, and other lodging properties worldwide. It operates its properties under the JW Marriott, The Ritz-Carlton, The Luxury Collection, W Hotels, St. Regis, EDITION, Bvlgari, Marriott Hotels, Sheraton, Westin, Autograph Collection, Renaissance Hotels, Le Méridien, Delta Hotels by Marriott, Tribute Portfolio, Gaylord Hotels, Design Hotels, Marriott Executive Apartments, Apartments by Marriott Bonvoy, Courtyard by Marriott, Fairfield by Marriott, Residence Inn by Marriott, SpringHill Suites by Marriott, Four Points by Sheraton, TownePlace Suites by Marriott, Aloft Hotels, AC Hotels by Marriott, Moxy Hotels, Element Hotels, Protea Hotels by Marriott, City Express by Marriott, and St.
Read More - Current Price
- $283.96
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 14 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $266.25 (6.2% Downside)
#5 - Caesar’s Entertainment (NASDAQ:CZR)
Casinos are attractive travel destinations, and Caesar’s Entertainment Inc. (NASDAQ: CZR) is one of the top picks in the sector. Caesar’s, which is now owned by Eldorado Resorts, has 54 properties worldwide, making it the largest casino operator in the United States. The company’s portfolio includes eight properties on the Las Vegas Strip, which is always a popular destination.
In addition to the company’s physical casinos and sports books, it has a mobile app that allows for online sports betting, which is how over 90% of consumers place their bets.
That said, CZR stock has been a market laggard for some time. The stock is down over 25% in the last five years and 12.6% in the last 12 months. However, analysts are forecasting earnings growth of over 1,300% in the next 12 months. That’s why the Caesar’s Entertainment analyst ratings on MarketBeat show a 55% upside for the stock.
About Caesars Entertainment
Caesars Entertainment, Inc operates as a gaming and hospitality company. The company owns, leases, or manages domestic properties in 18 states with slot machines, video lottery terminals and e-tables, and hotel rooms, as well as table games, including poker. It also operates and conducts retail and online sports wagering across 31 jurisdictions in North America and operates iGaming in five jurisdictions in North America; sports betting from our retail and online sportsbooks; and other games, such as keno.
Read More - Current Price
- $32.82
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $53.71 (63.7% Upside)
#6 - Winnebago Industries (NYSE:WGO)
Winnebago Industries Inc. (NYSE: WGO) is a case in which what goes up sharply can also go down sharply. Winnebago is one of the leading manufacturers of recreational vehicles (RVs). Demand for RVs surged during 2020 and 2021 as consumers looked for ways to travel with mitigation efforts in place.
However, RVs are a one-off purchase, and those mitigation efforts are now over. That means demand has normalized, and revenue and earnings are down year-over-year. And the company expressed in its most recent earnings presentation that demand will likely be lower in 2024.
That said, the company remains the market share leader in all its key categories. Those analysts are reasonably bullish on WGO stock, which is down 13% in 2024. Analysts give the stock a consensus price target of $71.80, which gives the stock a 14% upside. Plus, the company pays a dividend that has increased for the last five years and is beginning to look more attractive, with a 1.98% yield as of May 16, 2024.
About Winnebago Industries
Winnebago Industries, Inc manufactures and sells recreation vehicles and marine products primarily for use in leisure travel and outdoor recreation activities. The company operates through three segments: Towable RV, Motorhome RV, and Marine. It provides towable products that are non-motorized vehicles to be towed by automobiles, pickup trucks, SUVs, or vans for use as temporary living quarters for recreational travel, such as conventional travel trailers, fifth wheels, folding camper trailers, and truck campers under the Winnebago and Grand Design brand names.
Read More - Current Price
- $49.98
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $68.13 (36.3% Upside)
#7 - Visa (NYSE:V)
The last company on this list of travel stocks to buy is Visa Inc. (NYSE: V). It's not a travel stock per se, but data shows that consumers continue to fund their travel expenses with credit cards. And as one of the leading payment processors, Visa is a logical choice for inclusion on this list.
But with a forward P/E ratio of around 28x, is Visa a good stock to own right now? The Visa analyst ratings on MarketBeat give the stock a Moderate Buy rating with a consensus price target of $303.76. That's only about an 8% upside. However, several analysts have raised their price targets since Visa last reported earnings, and several of those targets are far higher than the consensus.
It's also worth noting that Visa pays a growing dividend. While the yield of 0.74% as of May 2024 isn't impressive, the dividend has been growing for 16 consecutive years and has a payout ratio of just 23%, which is very sustainable.
About Visa
Visa Inc operates as a payment technology company in the United States and internationally. The company operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It also offers credit, debit, and prepaid card products; tap to pay, tokenization, and click to pay services; Visa Direct, a solution that facilitates the delivery of funds to eligible cards, deposit accounts, and digital wallets; Visa B2B Connect, a multilateral business-to-business cross-border payments network; Visa Cross-Border Solution, a cross-border consumer payments solution; and Visa DPS that provides a range of value-added services, including fraud mitigation, dispute management, data analytics, campaign management, a suite of digital solutions, and contact center services.
Read More - Current Price
- $317.71
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 25 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $328.41 (3.4% Upside)
The travel narrative is a two-part story. First, and perhaps most importantly, there is consumer demand. But second, you're looking for companies that are doing their part to ensure that consumers have an experience that makes them want to travel again. Many companies are also finding ways to integrate artificial intelligence (AI) into the customer experience in a meaningful way.
Travel is also an international sector. In fact, much of its growth is expected to come from the demand for travel overseas. In a decade or two, space tourism may even be part of this sector.
However, as is the case with most companies, it comes down to market share, revenue, and earnings. Those are qualities that are common to every company in this presentation.
MarketBeat makes it easy to find travel stocks to buy. Once you're on the Travel Stocks page, you can use the screening tools to sort stocks by the qualities that appeal to you most.
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