Wall Street seems to be warming up to the travel stocks as vacationers put the finishing touches on their summer travel plans.
In fact, many top travel stocks have been moving steadily higher in recent quarters, well ahead of the summer. And though hotter summer quarters may have already been on the forecast for many investors and Wall Street analysts, I don’t think we’ll be in for a “sell the news” type of scenario, as demand has a chance to finally stack up against expectations.
As hopes for lower interest rates and plunging inflation pave the way for greater consumer spending in the nice-to-haves, perhaps the travel stocks have room to run well beyond booking season. Many Wall Street analysts seem to think the hot travel plays still have room to run from here.
Let’s examine three travel plays with robust share price momentum that still trade at reasonable valuations.
Uber (UBER)
Uber (NASDAQ:UBER) is a transportation service provider that’s in a league of its own. After correcting nearly 22% off its all-time highs of $81 and change, UBER stock now seems to be on the mend, up more than 10% since June began. Despite the toppy-looking moves made earlier this year, it’s hard to find anyone on Wall Street who’s not bullish on the stock.
Moreover, Uber’s dominance and record of operational excellence are major reasons the stock was able to melt and go parabolic in the past year. As we move into summer, a period of seasonal strength, UBER stock may have another shot at hitting new highs. It’s not just travelers who could jolt ride-hailing demand. More people going out to enjoy the summer heat could help Uber ride even higher after its latest road bump.
With a solid Uber One subscription that could drive usage whilst providing added value for its most frequent users and plenty of global share to gain, it’s not a mystery why most of Wall Street isn’t backing down from the high-flyer just yet.
Booking Holdings (BKNG)
Booking Holdings (NASDAQ:BKNG) is perhaps one of the best ways to bet on travel and leisure. Though there is competition in the space, Booking Holdings has continued to excel in areas where its rivals have fallen short. After an incredible 104% gain posted in the past two years, it seems like more than just a sizzling summer season of travel is baked into BKNG stock right here.
For the first quarter, Booking beat on sales and earnings, with gross travel bookings rising 10% year-over-year (YOY). Given its market leadership in the face of the ongoing travel resurgence, it’s tough to hop off BKNG stock. Indeed, it is at a fresh new high. In fact, the potential for the actual summer numbers to surpass estimates is likely.
At 29.1 times trailing price-to-earnings (P/E), BKNG stock certainly is not a cheap travel booking play. Nevertheless, the company really deserves a premium, especially if this travel boom has the legs to run into late summer and fall.
Hyatt Hotels (H)
As travel picks up, hotel bookings are sure to get a nice jolt. One of the more underrated stays plays has to be Hyatt Hotels (NYSE:H), an asset-light hotel operator that emphasizes upscale guest experiences.
With a business model focused on management and franchise fees, H stock is one of the hotel plays for investors who want to bet on high-end stays without excessive real estate exposure. Truly, the real estate market has wobbled quite a bit as interest rates rose in recent years. Though rate cuts are expected for the year ahead, expectations could fall short, especially if one (or two) rate cuts don’t happen this year.
Either way, Hyatt Hotels is a great way to play luxury stays, with the firm recently growing rooms to a record 129,000. With a powerful brand and more than enough capacity to benefit from a summer travel boom, H stock seems pretty cheap at just 23.3 times trailing P/E.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.