The travel industry is witnessing growth propelled by the surging trend of solo travel, a rising demand for authentic local experiences, and accelerated technology adoption, reflecting changing consumer preferences and driving economic expansion.
Therefore, investors could consider investing in quality travel stocks Air Canada (ACDVF), Bluegreen Vacations Holding Corporation (BVH), and Travel + Leisure Co. (TNL).
In November 2023, personal income rose by $81.60 billion (0.4% monthly), and disposable personal income increased by $17.90 billion (0.4%). Rising disposable incomes and trending aesthetics of traveling in social media platforms have boosted demand in the travel industry.
Moreover, the first UNWTO World Tourism Barometer reveals that international tourism in 2023 reached 88% of pre-pandemic levels, with approximately 1.3 billion international arrivals. Looking ahead, the report anticipates a full recovery by the end of 2024, driven by the release of pent-up demand, improved air connectivity, and a robust recovery in Asian markets and destinations.
Besides, the global hotels, resorts, and cruise lines industry is thriving due to increased demand from millennials and Gen Z for quality stays, boosted by a growing global travel and tourism sector. Factors like consumer spending, GDP growth, and affordable hotel prices drive industry expansion.
The global hotel, resort, and cruise lines market is expected to grow at a CAGR of 17.4% from 2022 to 2030.
In addition, the global airline industry is set to grow, driven by rising disposable income, a stable jet fuel market, and increased demand for air travel. The freight aircraft segment, focusing on rapid shipment delivery, is expected to be the fastest-growing. The global airline industry market is projected to grow at a CAGR of 25.5% until 2027.
Considering these conducive trends, let’s examine the fundamentals of the three travel stock picks.
Air Canada (ACDVF)
Based in Saint-Laurent, Canada, ACDVF provides domestic and international airline services with a fleet of 192 aircraft, including Air Canada, Air Canada Express, and Air Canada Rouge brands. The company also offers air cargo services, global vacation travel packages, cruise packages, and travel loyalty programs.
On January 8, 2024, ACDVF reported strong operational performance during the year-end holiday travel period, transporting nearly 2.6 million customers with a 70% on-time performance 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 an Inaugural Premier Partner and Official Airline for the league's first six teams.
The collaboration with PWHL features intellectual property rights, travel support, and a promotional ad campaign, reinforcing its commitment to women's sports and gender equality.
In the third quarter, which ended September 30, 2023, ACDVF generated total revenues 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 prior year quarter. It achieved adjusted net income and EPS of C$1.28 billion ($952.74 million) and C$3.41, respectively, which grew significantly year-over-year.
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 surpassed the revenue estimates in each of the trailing four quarters.
The stock has gained 9.4% over the past three months to close the last trading session at $13.40.
ACDVF’s POWR Ratings reflect its optimistic prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ACDVF has an A grade for Value and Quality and a B for Growth. Within the Airlines industry, it is ranked first out of 28 stocks.
In addition to the POWR Ratings stated above, one can access ACDVF’s additional Momentum, Stability, and Sentiment ratings here.
Bluegreen Vacations Holding Corporation (BVH)
BVH sells vacation ownership interests 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 purchasers.
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 annually, which translates to a yield of 1.07% on the prevailing price level.
During the third quarter, which ended September 30, 2023, BVH reported total revenues of $267.94 million, up 6.8% year-over-year. The company’s EPS and adjusted EBITDA attributable to shareholders grew 5% and 1.7% from the prior-year quarter to $1.25 and $42.56 million, respectively.
As of September 30, 2023, its total assets amounted to $1.54 billion, compared to total assets of $1.40 billion as of December 31, 2022.
Street expects BVH’s revenue and EPS to grow 4.3% and 46.1% year-over-year to $248.10 million and $0.98 for the fourth quarter ended December 2023, respectively. The company surpassed the revenue estimates in each of the trailing four quarters, which is impressive.
BVH’s shares 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’s POWR Ratings reflect its positive prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
BVH has a B grade for Growth and Sentiment. Within the B-rated Travel - Hotels/Resorts industry, it is ranked #5 out of 21 stocks.
In addition to the POWR Ratings stated above, one 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 selling vacation ownership interests, managing properties, and operating travel businesses and technology platforms. The company also offers direct-to-consumer rentals 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 annually, which translates to a yield of 4.57% on the prevailing price level, higher than its four-year average dividend yield of 3.94%.
The company has raised its dividend payouts at a CAGR of 4% and 3.3% over the past three and five years, respectively. Moreover, the company boasts a 16-year record for consecutive years of dividend payments.
In the third quarter, which ended September 30, 2023, TNL’s net revenues amounted to $986 million, up 5.2% from the previous-year quarter. The company generated operating income of $207 million, up 9.5% from the prior year’s quarter. Its EPS and adjusted EBITDA increased 8% and 6% year-over-year to $1.49 and $248 million, respectively.
The company anticipates an adjusted EBITDA in the range of $233 million to $248 million and projects an adjusted EPS 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 for the fourth quarter ended December 2023, respectively. The company surpassed the EPS estimates in each of the trailing four quarters.
TNL’s shares increased 17.2% over the past three months to close the last trading session at $39.42.
TNL’s POWR Ratings reflect this sound outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Value and Quality. Within the Travel - Hotels/Resorts industry, it is ranked #4.
Click here for TNL’s additional Growth, Momentum, Stability, and Sentiment ratings.
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ACDVF shares were trading at $13.49 per share on Tuesday afternoon, up $0.09 (+0.67%). Year-to-date, ACDVF has declined -4.46%, versus a 1.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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