The travel season has begun in full swing. Nothing can stop Americans from boarding their next flight and sipping their Pina coladas by the beach. An estimated 71 million Americans will be traveling this weekend to celebrate the Fourth of July.
This means investors need to start looking for stocks that could rake in sizzling summer profits. Many travel companies are looking hot right now with stocks ready to rally. Investing in them now could mean solid gains when results are reported. So, let’s explore three travel industry gems worth buying for a hot and spicy summer.
Delta Air Lines (DAL)
Source: EQRoy / Shutterstock.com
The largest airline in the world, Delta Air Lines (NYSE:DAL) sees impressive growth during the holiday period. Considering the Memorial Day weekend and the upcoming peak travel weekend, Delta Air Lines will report impressive quarterly revenue growth. Inflation could not stop Americans from traveling and many are heading to countries where the dollar fares well.
The ongoing recovery of the travel sector will help the airlines due to its extensive domestic and international routes. Also, Delta Air Lines has seen a growth in premium traffic, which means a higher margin. Management is optimistic about the growth prospects and expects a 5% to 7% jump in international travel bookings.
Notably, its fundamentals set the momentum for the remaining year with a 6% year-over-year (YOY) jump in operating revenue in the first quarter. The company quickly moved from a loss-making airline in 2023 to a profit-making airline in the first quarter of the year. Up 16% year-to-date (YTD), DAL stock is trading for $46.71 at the time of writing and remains one of the best stocks to buy below $50.
Also, the stock pays a dividend and has a yield of 1.28%. Based on the current trend, Delta Air Lines holds a solid position to benefit from summer travel.
Marriott International (MAR)
Source: Boyloso / Shutterstock
Leading hotel chain Marriott International (NASDAQ:MAR) has remained a solid industry player, despite rising competition. Many travelers still prefer a hotel over a rental unit and this is the reason that Marriott International benefits. A top choice in the industry, its financials are proof that the company has a lot more to come.
The comparable sales jumped 4.2% YOY, and the net income came in at $564 million in the first quarter. While the net income has declined YOY, the company’s global expansion plans could help boost the numbers. It managed to report an 11% YOY growth in the worldwide market.
Last year, the company signed a record number of franchise agreements representing 164,000 rooms globally. Loyalty program Marriott Bonvoy is a strong driver of consumer growth and business. It has over 185 million members globally and ensures repeat business.
Moreover, the company’s rich history and global presence reinforces revenue growth. Up 7% YTD and 30% in the past 12 months, the stock is exchanging hands for $239.98. The company has aggressive expansion plans across Europe and will add 100 properties and 12,000 rooms by the end of 2026. Europe is a global tourist destination and with the heavy crowds, the demand for hotel rooms is going to rise. Thus, Marriott International is planning to make the most of this opportunity.
Airbnb (ABNB)
Source: BigTunaOnline / Shutterstock.com
It is hard to talk about holidays and not mention Airbnb (NASDAQ:ABNB). One of the biggest beneficiaries of the summer travel season, Airbnb gives solid competition to hotel chains like Marriott International.
Up 12% YTD, the stock is exchanging hands for $154 and looks undervalued. It was sitting at $212 in 2021 and has lost a lot of value since then. The company will see a solid jump in booking and revenue in the current quarter due to the ongoing holiday period. For the first quarter, it reported an EPS of 41 cents while the profit jumped 126% YOY. This was the company’s best first quarter ever with revenue at $2.14 billion.
In addition, the Summer Olympics Games has already led to a 400% jump in Airbnb bookings in Paris. A pent-up demand will continue to drive growth and as the economy improves, we could see Airbnb move higher. It usually has a slow first quarter followed by excellent quarters due to the holidays.
The supply of new housing in the U.S. market could be a threat to the business but I do not think it will have a long-term impact on Airbnb. To improve user experience, the company has removed several low-quality listings and is working on expanding services. Ignore the temporary tailwinds and buy ABNB stock for long-term gains.
Airbnb is a high-quality business available at a discount right now.
On the date of publication, Vandita Jadeja 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.