The travel industry is certainly cyclical, and an economic downturn may keep some people away from travel stocks. Still, for the adventurous investor he considers his two stocks, EXPE and RCL, so pack your bags and take the journey with me.
Unfortunately, the post-pandemic travel boom will wane in 2022, with rising inflation forcing some consumers to postpone travel. However, inflation has already eased from his mid-2022 peak, giving some travel stocks room to rise this year. So, here are a pair of travel stock picks, EXPE and RCL, to add to your itinerary.
Let’s say you don’t want to bet your hard earned capital on a particular airline or hotel. Alternatively, you could consider his Expedia, a platform where shoppers book flights, hotel stays, and more.
EXPE’s stock price fell from over $200 last year to below $100. However, as a result, Expedia’s price-to-sales (P/S) ratio of 1.6x is very reasonable. I prefer his P/S ratio to be less than 5x.
Additionally, in case you didn’t know, Expedia’s website traffic in 2023 will be approximately 595.2 million unique users, up 49.02% year-over-year. This is a good sign, as website traffic is a fairly reliable indicator of interest in your product or service.
Despite the investor disappointment of EXPE stock last year, Expedia’s results weren’t terrible, especially in the third quarter. Impressively, Expedia reported record quarterly revenue, up 22% year-over-year, and a record third quarter of room bookings. Additionally, Expedia’s net profit increased 33% year-over-year in Q3 2022. Not too shabby considering this was a period of high inflation.
Additionally, Oppenheimer analyst Jed Kelly set a high target on Expedia stock at $120. Kelly also upgraded its share price from perform to outperform, with Oppenheimer analysts saying ” [online-travel booking] Trends remain strong thanks to latent demand and resilient consumers.
What is your target price for EXPE stock?
EXPE has a medium buy consensus rating based on 10 buy, 9 hold, and 1 sell ratings assigned in the last three months. The average Expedia stock price target of $124.05 implies a 7.2% upside potential.
If the future of online travel bookings is bright, what about cruises? Like EXPE stock, RCL stock underperformed last year. However, like Expedia, Royal Caribbean posted a surprisingly strong performance in his third quarter of 2022. Royal Caribbean posted his EPS of $0.26 in Q3 2022 after posting negative EPS for consecutive quarters (positive, not negative).
Additionally, Royal Caribbean’s 2023 year-to-date website traffic is approximately 74.7 million unique users, a 97.48% increase over the same period in 2022. Now Royal Caribbean needs to convert website surfers into paying customers.
Another commonality with Expedia is that Royal Caribbean’s P/S ratio is very reasonable. In fact, his P/S ratio of 2.2x that of Royal Caribbean suggests bargain potential, which should interest value seekers, albeit those who like risk and volatility.
Despite the rough seas of 2022, Royal Caribbean really ended the year on a strong note. Notably, her Celebrity Cruises in the Royal Caribbean division had a record number of bookings on Black Friday and had a record amount on Cyber Monday last year.
What’s more, Royal Caribbean International reported that Black Friday 2022 is “the biggest booking day in the cruise line’s 53-year history.” This was apparently “the third time a record has been broken in 2022 and the current peak of the brand’s highest-volume booking week,” as this is certainly a landmark moment for Royal Caribbean. , let’s see what Wall Street experts think about his RCL stock.
What is your target price for RCL shares?
RCL has a moderate buy consensus rating based on 5 buy, 3 hold and 1 sell ratings assigned in the last 3 months. Royal Caribbean’s average price target of $71.89 suggests a % upside potential.
Takeaway: Try these two travel stocks for long haul
Travel stocks crashed last year, but the P/S ratio shows there are some bargains for long-term investors. Website traffic and other data also point to potential travel interest and unexpectedly strong performances for Expedia and Royal Caribbean. So if you can handle a turbulent 2023, consider positions in EXPE and RCL stocks.
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The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.