5 best travel stocks to buy for 2022
Jhe coronavirus pandemic has completely decimated the travel industry. For more than a year – and almost two years in some cases – tour operators have been at a standstill.
Although the airlines were still flying, their load factors were so low that pilots were laid off, ground staff were laid off, and the number of flights was drastically reduced, while losses piled up. Accommodation companies and online travel agencies suffered just as much, if not more. Cruise ships have probably had the worst of it, with the CDC going so far as to issue a “no sail” order that has forced ships to drop anchor in various locations around the world — some even ending up on the scrap heap.
But even though the travel industry has had to endure most of the past two years, a recovery is in sight. The majority of Americans are now fully immunized, shutdown orders seem to be a thing of the past, and denied travelers are on the move. According to the US Travel Association, domestic leisure travel has already surpassed pre-pandemic levels, and domestic business travel is expected to reach 96% of pre-pandemic levels by 2023.
What are the best travel stocks to buy right now?
There are two sides to every coin, and while consumers and businesses are already spending their money, some obstacles to profitability remain for travel agencies. Many companies have had to take on heavy debt to survive the pandemic, and others will take time to ramp up operations to the point where they can once again maximize profits.
In this type of environment, it is advantageous to be diversified within the sector. With that in mind, here’s a look at five companies operating in different areas of the travel industry that all have consensus buy ratings from Wall Street analysts. Consult your financial advisor to find out which of these items may match your investment objectives and risk tolerance.
United Airlines (UAL)
If you’ve seen the news in 2022, especially in the summer, you’ve seen how passengers are flocking to airlines, with numbers reaching near pre-pandemic levels. This will greatly help carriers like United Airlines that have robust domestic and international services.
Just keep in mind that there are still plenty of risks for carriers like United. Although Europe has had the worst, airlines in general are reeling from lost luggage, understaffing and the ever-present risk of a coronavirus upsurge. Rising inflation and fuel prices are also not doing the airlines a favor. However, if these problems prove to be temporary and passengers continue to fill the planes, airlines like United have the potential for a big recovery.
According to Nasdaq, all 19 analysts who track the company have a consensus buy rating on the stock and a 12-month average price target of $47.67, about 30% above current levels.
Norwegian Cruise Line Holdings (NCLH)
Cruise lines in general are lucky to be afloat after all they’ve had to endure during the coronavirus pandemic. Unlike hotels and airlines, which could at least operate with limited capacity, all major cruise lines basically had to stop working for over a full year. During this time, however, they still had many expenses, from mooring to maintaining their ships. As a result, Norwegian Cruise Line Holdings had to take on a whopping $6.6 billion in additional debt to survive.
However, things are looking up for the industry. On July 18, the CDC announced it would no longer report coronavirus levels on cruise ships, opening the door for cruise lines to stop pre-cruise testing and suppressing some of the negative press that had been harassing the industry since the resumption of shipping. Just like the airlines, it will be some time before cruise lines can resolve their staffing and ship logistics issues to get everything 100% up and running, but they appear to be on the right track to do so.
Ten analysts covering Norwegian Cruise Line Holdings have a consensus Buy rating on it, with a 12-month average price target of $19.73. This would represent a whopping 63% gain from current levels.
Reservation credits (BKNG)
Online travel agencies like Booking Holdings have suffered greatly during the pandemic because there was little that customers could book. But if you believe in the global travel rebound at all, Booking Holdings is a company you’ll probably want to own. Booking Holdings doesn’t just own its namesake property, Booking.com, which itself is the world’s largest online travel agency. Booking Holdings also owns Agoda, Priceline, OpenTable, Rentalcars.com and travel search engine Kayak.
In other words, Booking Holdings owns a huge segment of the online booking world, and its revenue is expected to skyrocket as travel returns to normal. In its March 2022 earnings report, year-over-year revenue jumped more than 136%, potentially predicting future revenue gains.
The consensus rating from 24 analysts covering Booking Holdings is a Solid Buy, and their 12-month average price target sits 35% above current levels at $2,588 per share.
The accommodation industry has suffered greatly during the pandemic and the carnage has been widespread. The Airbnb Industry Disruptor started with a bang, jumping 223% to an all-time high of $219.94 just two months after its December 2020 IPO at $68 per share. But the company was not immune to the perils of the pandemic, and even after a recent rally, shares were sitting at $108.84 as of July 28, 2022.
Yet the assets that made Airbnb famous after its IPO remain in place. The company serves a huge and growing market, and unlike its traditional hosting competitors, it doesn’t have to incur the massive expense of building, owning, acquiring, and managing. maintenance of physical properties. Airbnb simply functions as a service portal, without having to carry any physical properties on its balance sheet. This helps keep costs low and keeps the business agile.
Analysts agree, with an upbeat view on Airbnb’s future. The 12-month average price target of the 30 analysts that track Airbnb is $157.15, with a consensus Buy rating. With the stock at $108.84 as of July 28, analysts expect a 44% rise over the next year.
The Walt Disney Co. (DIS)
If you’re looking for all-in-one stock when it comes to the entertainment and travel industries, Disney might be the ticket. The stock has been beaten ruthlessly during the pandemic, as its three main industries – cruise lines, theme parks and filmed entertainment – have all been shut down. But the company has been slow to recover, with its shares down 14.51% in 2021 and another 32.25% so far in 2022. As such, the former growth stock is now a value play, but on the verge of a strong recovery.
In addition to its renowned library of classic American films, the company also owns Marvel Studios and Lucasfilm. On the streaming front, beyond its flagship streaming service, Disney+, the company owns ESPN+, ABC, Lifetime, History, A&E, FX and Hulu. As Americans and even tourists around the world begin to consume the company’s filmed and streamed content, return to theme parks and sail its cruise line, revenues are expected to jump.
“Strong Buy” is the consensus rating on Disney Stock of the 27 analysts who track it, with a one-year average price target of $136.13. With shares trading at around $105 per share at the end of July 2022, a potential gain of 30% awaits investors 12 months from now.
Travel is definitely on the rise and there will undoubtedly be some big winners in the industry. However, choose exactly the right travel stock can be a challenge, especially in light of the effects of the pandemic. Selecting market leaders in a variety of travel sub-sectors could be a winning strategy. Just be sure to do your own research and find the stocks that best fit your overall portfolio.
Data is accurate as of July 28, 2022 and is subject to change. Analyst rating information is sourced from Nasdaq.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.