Despite cutbacks in certain areas like dining out and luxury items as consumers tighten their purse strings, the wanderlust for travel remains resilient. This steadfast interest has resulted in an unexpected buoyancy in the travel sector stocks, offering a golden opportunity for prudent investors seeking to enhance their portfolios with travel stocks.
A whopping 93% of travelers have indicated plans for trips within the next half-year. Moreover, the total number of trips by both domestic and international travelers in the U.S. is projected to hit pre-pandemic levels by late 2024. The industry forecasts an upward trajectory in travel expenditure, potentially soaring to $1.22 trillion by 2027. With the travel bug refusing to die down, these three travel stocks stand out as prime contenders for investment. Leveraging technology to slash operational costs and explore new revenue streams, they beckon investors seeking to ride the travel wave.
Exploring Viking Holdings (VIK)
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Viking Holdings (NYSE:VIK), the parent company of Viking River Cruises, made a splash with its recent initial public offering (IPO), witnessing an impressive 8% surge in stock value since its debut last month. Established in 1997, Viking Holdings has garnered popularity and brand recognition over the years.
The traditional activity of river cruises, once regarded as a pastime for older demographics, is experiencing a revival. Young influencers on social media platforms are promoting the ease and affordability of traveling through Europe’s waterways, allowing travelers to unpack just once while exploring several diverse cities along the route.
Viking Holdings stands out as a prominent player in the river cruising sphere and is among the select publicly traded river cruise corporations. Positioned strategically to capitalize on the uptick in interest and spending on travel, the company has ambitious plans ahead. With the construction of ten new vessels slated for completion by 2026, coupled with expansions into land tours and safaris, Viking Holdings is set to tap into the luxury vacation market extensively.
In an enticing proposition, investors can still hop on the bandwagon before the upcoming earnings report in July 24, making VIK an alluring choice in the current travel stock landscape.
Delving into Booking Holdings (BKNG)
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Booking Holdings (NASDAQ:BKNG), boasting a sprawling network of subsidiary brands such as Priceline, Booking.com, Agoda, KAYAK, and OpenTable, operates as the world’s largest self-service travel agency across more than 220 countries and territories.
The first-quarter 2024 results painted a promising picture for Booking Holdings. A remarkable 300 million room nights were booked in the quarter, showcasing a 9% year-over-year (YOY) growth that exceeded management’s projections. Revenue surged to $4.4 billion, a 17% YOY increase, while adjusted EBITDA soared by 53% to hit $900 million. Notably, earnings per share (EPS) witnessed an impressive 76% YOY growth. Although the company’s CFO, Ewout Steenbergen, warned of a possible slowdown in room night growth for Q2, the robust Q1 performance underscores Booking Holdings’ agility in fueling rapid ascension amid an otherwise tepid economic landscape.
Employing artificial intelligence (AI) tools to enhance customer-facing platforms and diminish dependence on live agents, Booking Holdings is poised to bolster its margins by trimming customer service costs per transaction while encouraging additional bookings. This meticulous strategy positions the company strongly for future success.
Examining US Global Jets ETF (JETS)
The Resurgence of the Aviation Industry: A Dive into US Global Jets ETF
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The US Global Jets ETF (NYSEARCA:JETS) encompasses a diverse portfolio of companies within the aviation sector, including U.S. and international passenger airlines, aircraft manufacturers, airports, terminal services providers, and airline-related internet media and services companies. Notable holdings like Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL), and American Airlines (NASDAQ:AAL) collectively dominate a significant portion of the fund.
Approximately three quarters of the ETF’s composition consists of U.S.-based entities, with the remainder comprising companies from various countries, including Canada, Japan, Mexico, Brazil, and the U.K.
A Turbulent Odyssey Post-Pandemic
Following the upheaval caused by the pandemic, the airline industry has encountered various challenges, from elevated fuel costs to labor shortages and contractual disagreements. Additionally, negative publicity surrounding the quality of Boeing’s (NYSE:BA) aircraft has further compounded the woes faced by airline stocks, pushing them into a downward trajectory.
However, amidst this turmoil lies an opportunity for savvy investors eyeing the travel sector. The US Global Jets ETF (JETS) presents an attractive avenue to capitalize on the market downturn and potentially reap substantial rewards.
Projected Flight Path to Recovery
Although JETS remains a considerable distance from its pre-pandemic peak of $32, analysts foresee a promising outlook, predicting a 23% upside with an average price target of $24.28. Year-to-date (YTD), the ETF has already registered a 5% increase, showcasing resilience in the face of adversity.
While investing in JETS may necessitate a long-term commitment, positioning oneself in the aviation sector during its turbulent phase could yield substantial returns once the industry regains its vigor, a rebound that appears inevitable.
On the date of publication, Philippa Main held a LONG position in VIK stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
