Freedom Finance Europe head of investment research, Maxim Manturov, explores five travel stocks set for growth as the industry continues to recover.
It is expected that the financial standing in most sectors will improve this year with the travel industry being no exception. With traveling becoming easier and less hassle compared to a year ago more people are looking to go abroad. As a result, the transport industry is predicted to generate a profit of $4.7 billion (£3.83 billion) in 2023 alone, resulting in an upward trend in travel stocks.
The travel market is expected to grow by 13.86% from 2022 to 2026, totalling $451.19 billion (£373.65 billion). The market is driven by technological advances and growing social media penetration and with the general optimism for the industry, companies and travellers are leaning towards a recovery. So, what organisations will benefit from this surge in travel?
Top five travel stocks to watch:
TripAdvisor (TRIP) is the world’s leading travel metasearch company. The website offers 1 billion reviews and information on 8 million hotels, restaurants, experiences, airlines, and cruises. In 2021, 74% of the company’s revenue came from its core segment, which includes hotel revenue generated by advertising on its metasearch platform. Viator, its impressions brand, accounted for 20% of sales in 2021, and TheFork, its restaurant brand, generated 9% of revenue (about 3% of sales were inter-segment, which are excluded from consolidated revenue). The average target price for TripAdvisor is $30 (£24.5) with a 58% upside potential.
Expedia (EXPE) is the world’s second-largest online travel agency by bookings, offering accommodation (75% of total sales in 2021), airfare (3%), car rentals, cruises, and destinations, as well as advertising revenue (7%). Transaction fees for online bookings make up the bulk of sales and profits. Expedia operates a number of branded travel booking sites including Expedia.com, Hotels.com, Travelocity, Orbitz, Wotif, AirAsia and Vrbo. With the acquisition of Trivago, it has also expanded into travel media. The average target price for this stock is $133 (£109.5) with a 38% upside potential.
Boeing (BA) is a major aerospace and defence company. It operates in four segments: commercial aircraft, defence, space and security, global services, and Boeing Capital. Boeing’s commercial aircraft segment competes with Airbus in the production of aircraft with a capacity of 130 seats or more and provides aftermarket support for airlines. Boeing’s defence, space and security segment compete with Lockheed, Northrop and several other firms in building military aircraft and weapons. The average target price is for shares is $261 (£212) with a 27% upside potential.
Airbnb (ABNB), founded in 2008, is the world’s largest online travel agency for alternative accommodation, offering users boutique hotel and experience booking services. Listings from the company’s 4 million hosts are spread across 220 countries and 100,000 cities and towns. In 2021, 54% of revenue came from North America, 32% from Europe/Middle East/Africa, 7% from Asia Pacific and 7% from Latin America. Transaction fees for online bookings make up all its revenue. Airbnb has a target price of $140 (£115) and an upside potential of 14%.
Booking Holdings (BKNG) is the world’s largest online travel agency by revenue, offering booking and payment services for hotel and alternative rooms, airline tickets, car rentals, restaurant tables, cruises, experiences, and other travel packages. The company operates a number of branded travel booking sites including Booking.com, Agoda, OpenTable and Rentalcars.com, and has expanded into travel media following the acquisition of Kayak and Momondo. Transaction fees for online bookings make up the bulk of revenues and profits bringing the target price to $2,900 (£2,363) with a 14% upside potential.