Booking (BKNG): Reported strong fourth quarter 2021 revenue and earnings
Marriott International (MAR): Stock has shown resilience during the decline in 2022
Royal Caribbean Cruises (RCL): Important summer cruise season should provide tailwinds
Source: Kokoulina / Shutterstock.com
Reopening of international borders and fewer travel restrictions, along with improved investor sentiment, are helping boost the overall momentum in travel stocks. We are witnessing a recovery in travel demand while the severity of Covid-19 infections continues to decline. Meanwhile, the updated Centers for Disease Control and Prevention (CDC) guidelines no longer recommend universal indoor face coverings.
However, such positive developments in the industry have not yet translated into strong gains for many leisure and travel names. For instance, in the past year, the Dow Jones U.S. Travel & Tourism Index was down around 17%. And since January it has declined close to 9%.
Now, analysts believe the upcoming spring break, followed by the summer, should boost travel stocks as many Americans make plans to travel especially to sunnier destinations. If investor optimism remains high, we could see many travel stocks grow significantly in 2022.
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New research from the World Travel and Tourism Council (WTTC) indicates that the travel and tourism sector could see a significant rebound this year. Accordingly, the “sector’s contribution to the global economy could reach $8.6 trillion this year, just 6.4% behind pre-pandemic levels.” Pre-pandemic travel and tourism generated almost $9.2 trillion.
With that information, here are three travel stocks that could generate significant returns in the upcoming months.
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52-week range: $1,796.45 – $2,715.66
First on our list is Booking (NASDAQ:BKNG), the largest online travel agency worldwide by revenue. It serves global customers via well-known brands, including Booking.com, Agoda.com, Priceline.com, Rentalcars.com, and OpenTable.
Booking announced Q4 2021 results on Feb. 23. Revenue surged 141% year-over-year (YoY) to $3 billion. Non-GAAP net income came in at $654 million, or $15.83 per diluted share, compared to a non-generally accepted accounting principles (GAAP) net loss of $23 million a year ago. Cash and equivalents ended the period at $11.1 billion.
Customer trends suggest a meaningful recovery as the pandemic-driven restrictions ease further. The group’s gross bookings grew 160% YoY in Q4, fueled by solid demand in agency and merchant channels.
Yet BKNG stock plunged almost 34% following Russia’s invasion of Ukraine. However, management immediately reminded investors that total gross bookings in the two countries were not high enough to impact operations.
BKNG stock is down about 10% year-to-date (YTD). Yet, it has managed to bounce almost 23% from its 52-week low of $1796 on Mar. 8. Shares are trading at 23.9 times forward earnings and 7.6 times trailing sales. The 12-month median price forecast for Booking stock stands at $2750.
Marriott International (MAR)
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52-week range: $127.23 – $184.99
Next up on our list is Marriott International (NASDAQ:MAR) one of the largest hotel names worldwide. The leisure group operates, franchises, and licenses lodgings with around 8,000 properties under 30 hotel brands.
Marriott released Q4 2021 results on Feb. 15. Revenue jumped 105% YOY to $4.5 billion. Adjusted net income increased to $430 million, or $1.30 per diluted share, up from $39 million in the prior-year quarter.
MAR stock has been rallying since the easing off travel restrictions worldwide. Soaring demand from business travelers is also providing tailwinds.
As a result, revenue per available room (RevPAR) skyrocketed by 125% YOY, down just 19% versus the same period in 2019. Management recently announced plans to increase its total available rooms by around 4%.
MAR stock is up 20% over the past 12 months. The stock has managed to bounce more than 16% from its Russia-Ukraine induced low of $146 on Mar. 8. Shares are trading at multiples of 29.1 times forward earnings and 3.8 times trailing sales. Meanwhile, the 12-month median price forecast for Marriott stock is at $172.50.
Royal Caribbean Cruises (RCL)
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52-week range: $61.45 – $98.27
Last on our list, there’s Royal Caribbean Cruises (NYSE:RCL), the world’s second-largest cruise line operator. It has a fleet of over 60 ships that travel to around 1,000 destinations. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises brands.
RCL issued Q4 2021 results on Feb. 4. Revenue went up to $982 million,. A year ago, it had been $34 million. Adjusted net loss came in at $1.2 billion, or $4.78 per share, up from $1.1 billion a year ago. The company ended 2021 with $2.7 billion in cash and equivalents against $18.8 billion in long-term debt.
The end of pandemic restrictions mean operations are slowly normalizing. The cruise operator brought 50 of its ships back to service.
Analysts note that the demand for cruises remains strong despite higher prices. Royal Caribbean reported $3.2 billion in customer deposits, an improvement of $400 million over the previous quarter.
RCL stock is down more than 8% over the past year. Yet, it has managed to bounce 25% from its 52-week low of $61.45 on Mar. 8. Shares are trading at 11.3 times trailing sales. Finally, the 12-month median price forecast for RCL stock stands at $86.
On the date of publication, Tezcan Gecgil did not have (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.
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