Inflation showed signs of cooling down in July, with prices climbing 8.5% from a year ago, less than expected, and down 0.6% from its June peak. Consequently, travel demand is expected to rise ahead of the Labor Day weekend.
“Prices will probably drop a little bit between now and the middle of October. You will want to book your holiday travel by that second week of October,” Haley Berg, lead economist for Hopper, said.
Moreover, according to the Tripadvisor Fall Index survey, around 37% of Americans still prefer to travel as planned this fall, irrespective of inflation. In addition, revenue in the travel and tourism industry is projected to grow at a CAGR of 8.5% from 2022 to 2026.
Given the backdrop, it could be wise to add fundamentally sound travel stocks Bluegreen Vacations Holding Corporation (BVH), Playa Hotels & Resorts N.V. (PLYA), and Target Hospitality Corp. (TH) to your portfolio as inflation cools.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It markets and sells vacation ownership interests (VOIs) and manages resorts in leisure and urban destinations. The company’s network includes 45 club resorts, 23 club associate resorts, and 128 Bass Pro Shops and Cabela’s stores.
On August 3, 2022, Alan B. Levan, BVH’s Chairman and CEO, said, “Overall, the demand for vacations by Bluegreen Vacation Club owners has been strong, and we believe our core strategy of primarily offering a ‘drive-to’ network of resorts will continue to serve as a growth driver.”
BVH’s total revenue came in at $235.60 million for the second quarter ended June 30, 2022, up 21.8% year-over-year. Its free cash flow increased 35.6% year-over-year to $61.05 million. Moreover, the company’s sales of VOIs increased 57.1% year-over-year to $144.26 million.
Analysts expect BVH’s revenue to increase 16.5% year-over-year to $882.17 million in the current year. Its EPS is estimated to increase 32.3% year-over-year to $3.69 in 2022. Over the past year, the stock has gained 15.8% to close the last trading session at $23.90.
BVH’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BVH has an A grade in Value and Quality and a B in Sentiment. Within the B-rated Travel - Hotels/Resorts industry, it is ranked #1 among 21 stocks. Click here to see the additional POWR Ratings for Momentum, Growth, and Stability for BVH.
Playa Hotels & Resorts N.V. (PLYA)
PLYA and its subsidiaries own, develop, and operate resorts in prime beachfront locations in Mexico and the Caribbean. The company runs a portfolio of 22 resorts with 8,366 rooms located in Mexico, Jamaica, and the Dominican Republic.
On August 2, 2022, PLYA entered into an agreement to take on the management of the renowned Seadust Cancun Family Resort in Mexico. This collaboration highlights PLYA’s position as a top player in hospitality management.
PLYA’s total revenue came in at $221.27 million for the second quarter ended June 30, 2022, up 71.8% year-over-year. Its adjusted EBITDA increased 169.3% year-over-year to $61.70 million. Moreover, the company’s net income came in at $30.50 million, compared to a net loss of $7.80 million in the year-ago period.
Street expects PLYA’s revenue to increase 56.5% year-over-year to $836.60 million in the current year. Its EPS is estimated to increase 200% year-over-year to $0.48 in 2022. Over the past month, the stock has gained 13.3% to close the last trading session at $7.33.
PLYA has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Sentiment and a B for Quality, Growth, and Value. It is ranked #2 in the same industry. Beyond what is stated above, we’ve also rated PLYA for Momentum and Stability. Get all the PLYA ratings here.
Target Hospitality Corp. (TH)
TH operates as a specialty rental and hospitality services company in North America. The company operates through four segments- Hospitality & Facilities Services – South; Hospitality & Facilities Services – Midwest; Government; and TCPL Keystone.
TH’s total revenue came in at $109.65 million for the second quarter ended June 30, 2022, up 46.2% year-over-year. Its net income came in at $22.85 million, compared to a loss of $912,000 in the prior-year period. The company’s adjusted EBITDA came in at $56.12 million, up 75.7% year-over-year.
TH’s revenue is expected to increase 75% year-over-year to $509.80 million in the current year, while its EPS is estimated to increase 2,840% year-over-year to $1.37. Over the past year, the stock has gained 329.1% to close the last trading session at $14.16.
TH has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade in Growth, Sentiment, and Quality. It is ranked #3 in the same industry. We’ve also rated TH for Momentum, Stability, and Value. Get all TH ratings here.
BVH shares were trading at $23.37 per share on Friday afternoon, down $0.53 (-2.22%). Year-to-date, BVH has declined -32.63%, versus a -10.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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