The travel industry is witnessing growth driven by the growing trend of solo travel, increasing demand for authentic local experiences, and the accelerated adoption of technology that reflects changing consumer preferences and drives economic expansion.
Therefore, investors may consider investing in quality tourism stocks Air Canada (ACDVF)Bluegreen Vacations Holding Corporation (BVH) and Travel + Leisure Co. (TNL).
In November 2023, personal income grew by $81.60 billion (0.4% monthly), and disposable personal income increased by $17.90 billion (0.4%). Rising disposable incomes and trendy travel aesthetics on social media platforms have boosted demand in the travel industry.
In addition, UNWTO’s first World Tourism Barometer reveals that international tourism in 2023 has reached 88% of pre-pandemic levels, with an estimated 1.3 billion international arrivals. Looking ahead, the report predicts full recovery by the end of 2024driven by the release of pent-up demand, improved air connectivity and the robust recovery of Asian markets and destinations.
In addition, the global hotel, resort and cruise line industry is booming due to increased demand from millennials and Gen Z for quality stays, fueled by the growing global travel and tourism sector. Factors such as consumer spending, GDP growth and affordable hotel prices are driving the expansion of the industry.
The global market for hotels, resorts and cruise lines is expected to grow by a CAGR of 17.4% from 2022 to 2030
In addition, the global airline industry is expected to grow, driven by rising disposable income, a stable jet fuel market and increased demand for air travel. The cargo aircraft segment, which focuses on the rapid delivery of shipments, is expected to be the fastest growing. The global airline market is expected to grow by a CAGR of 25.5% until 2027
With these favorable trends in mind, let’s look at the basics of three travel stock picks.
Air Canada (ACDVF)
Based in Saint-Laurent, Canada, ACDVF serves domestic and international airlines with a fleet of 192 aircraft, including the Air Canada, Air Canada Express and Air Canada Rouge brands. The company also offers air cargo services, global vacation travel packages, cruise packages and loyalty programs.
On January 8, 2024, ACDVF reported a strong operational performance during the year-end holiday travel period, transporting nearly 2.6 million customers at 70% on-time efficiency and achieving its best results in a decade for various operational metrics.
On December 28, 2023, ACDVF partnered with the Professional Women’s Hockey League (PWHL) as the inaugural Senior Partner and Official Airline for the league’s top six teams.
The partnership with the PWHL includes intellectual property rights, travel support and a promotional advertising campaign, reinforcing its commitment to women’s sport and gender equality.
In the third quarter ended September 30, 2023, ACDVF generated total revenue of C$6.34 billion ($4.72 billion), up 19.2% year-over-year. The company reported adjusted EBITDA of C$1.83 billion ($1.36 billion), up 73.1% from the year-ago quarter. He achieved an adjusted net income and EPS of C$1.28 billion ($952.74 million) and C$3.41 respectively, which were up significantly over the year.
The Street expects ACDVF’s revenue to grow 9.2% year-over-year to $3.79 billion for the fourth quarter ended December 2023. Its EPS for the same quarter is expected to improve 95.9% year-over-year . The company has topped revenue estimates in each of the last four quarters.
Shares have gained 9.4% over the past three months to close the last trading session at $13.40.
ACDVF POWR ratings reflect his optimistic outlook. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ACDVF is rated A for value and quality and B for growth. Within airlines industry, it is ranked first out of 28 stocks.
In addition to the POWR ratings listed above, you can access the additional ACDVF momentum, stability, and mood ratings here.
Bluegreen Vacations Holding Corporation (BVH)
BVH sells vacation units and manages resorts in various destinations, providing a range of services to enhance the vacation experience. The company also offers mortgage, title and financing services to qualified buyers.
On December 18, 2023, BVH paid a quarterly cash dividend on its Class A and Class B common stock of $0.20 per share. The company pays $0.80 per year, which translates to a yield of 1.07% from the prevailing price level.
In the third quarter ended September 30, 2023, BVH reported total revenue of $267.94 million, up 6.8% year-over-year. The company’s EPS and adjusted EBITDA attributable to shareholders rose 5% and 1.7% from the year-ago quarter to $1.25 million and $42.56 million, respectively.
As of September 30, 2023, its total assets stood at $1.54 billion, compared to $1.40 billion in total assets as of December 31, 2022.
The Street expects BVH’s revenue and EPS to grow 4.3% and 46.1% year-over-year to $248.10 million and $0.98 million, respectively, for the fourth quarter ended December 2023. The company beat revenue estimates in each of the last four quarters, which is impressive.
Shares of BVH have gained 153.8% over the past year and 132.8% over the past three months to close the last trading session at $75.
BVH POWR ratings reflect her positive outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
BVH has a B rating for growth and mood. Within the B-rating Travel – Hotels/Resorts industry, it is ranked #5 out of 21 stocks.
In addition to the POWR ratings listed above, you can access BVH’s additional Value, Momentum, Stability, and Quality ratings here.
Travel + Leisure Co. (TNL)
TNL engages in vacation ownership and hospitality services, including vacation ownership sales, property management and tourism business management, and technology platforms. The company also offers direct customer hire and private label travel booking solutions.
On December 29, 2023, TNL paid a regular cash dividend on the Company’s common stock of $0.45 per share. The company pays $1.80 per year, which translates to a yield of 4.57% at the prevailing price level, higher than the four-year average dividend yield of 3.94%.
The company has grown its dividend payouts at a CAGR of 4% and 3.3% over the past three and five years, respectively. In addition, the company boasts a 16-year record of consecutive years of dividend payments.
In the third quarter ended September 30, 2023, TNL’s net income was $986 million, up 5.2% from the prior-year quarter. The company generated operating income of $207 million, up 9.5% from the year-ago quarter. Its EPS and adjusted EBITDA increased 8% and 6% year-over-year to $1.49 million and $248 million, respectively.
The company expects adjusted EBITDA in the range of $233 million to $248 million and forecasts adjusted earnings per share of approximately $1.32 to $1.46 for the fourth quarter of 2023.
TNL’s revenue and EPS are expected to grow 4.8% and 5.7% year-over-year to $942.41 million and $1.37 million, respectively, for the fourth quarter ended December 2023. The company beat EPS estimates in each of the last four quarters.
Shares of TNL are up 17.2% over the past three months to close the last trading session at $39.42.
TNL’s POWR ratings reflect this reliable outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock is rated B for value and quality. Within the travel industry – hotels/resorts, it is ranked #4.
Click here for the additional TNL ratings of growth, impulse, stability, and mood.
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ACDVF stock was trading at $13.49 per share on Tuesday afternoon, up $0.09 (+0.67%). Year-to-date, ACDVF is down -4.46%, compared to a 1.71% rise in the benchmark S&P 500 over the same period.
About the Author: Kritika Sarmah
Her interest in risk instruments and her passion for writing made Kritika an analyst and financial journalist. She earned a Bachelor of Commerce degree and is currently pursuing a CFA program. With its fundamental approach, it aims to help investors identify untapped investment opportunities. More ▼…
