5 US travel & tourism stocks to watch ahead of New Year

November 30, 2022 05:29 AM PST | By Rupam Roy
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  • Revenue of Copa Holdings, SA (CPA) rose over 14 per cent from Q3 FY19.
  • Target Hospitality Corp. (TH) expects its revenue to be as much as US$ 500 million in fiscal 2022.
  • According to a report, over 2.5 million passengers used the US airports on Sunday, November 27.

The investors might be keeping a close track of the US travel and tourism sector, with the holiday season in focus. Several studies showed that Americans are preparing to spend more during the holiday season.

The holiday weekend saw the highest number of passengers at the United States airport in three years, the Transportation Security Administration (TSA) said. According to the report, over 2.5 million passengers used the US airports on Sunday, November 27, notching the highest number of single-day use since December 2019.

However, despite the strong spending, the metrics were still down over 10 per cent compared to three years ago. Over 2.8 million passengers had used the US airports in the last pre-pandemic Thanksgiving weekend, mentioned the TSA report.

So, the data suggested that despite the Americans increasing their spending compared to the pandemic period; it still lacks the pre-pandemic level. The soaring inflation and Fed's drive to increase borrowing costs have forced several consumers to cut their budgets in recent months.

However, investors are expected to keep a close watch on the travel stocks and other sectors for cues on consumer behavior during the holiday season.

The Transportation Security Administration said that they have witnessed a surge in travel in 2022, and are expecting busy security checkpoints at the US airports this holiday travel season.

Now, keeping the upcoming events like Christmas, and New Year, among others, the sector might gain more traction, as the consumers could increase their spending on travel-related activities.

Here we explore five travel stocks, which includes Las Vegas Sands Corp. (NYSE: LVS), Copa Holdings, SA (NYSE: CPA), MakeMyTrip Limited (NASDAQ: MMYT), Target Hospitality Corp. (NASDAQ: TH), and Bowlero Corp. (NYSE: BOWL), and their recent stock and financial performance.

Las Vegas Sands Corp. (NYSE: LVS)

The leading American casino and resort firm, Las Vegas Sands Corp, holds a market cap of US$ 34.24 billion. The company's stock, which operates world-class "integrated resorts" featuring gambling, accommodation, etc., soared around 16 per cent YTD and about 15 per cent YoY.

The LVS stock jumped 15 per cent QTD, with its close at US$ 43.65 on November 28. Meanwhile, it was up over two per cent in the pre-market trading session on Tuesday, November 29.

Meanwhile, Las Vegas Sands Corp's revenue was US$ 1.01 billion in Q3 FY22, up from US$ 857 million in Q3 FY21. Meanwhile, the operating loss totaled US$ 177  million, down from an operating loss of US$ 316 million.

Copa Holdings, S.A. (NYSE: CPA)

The NYSE-listed airline company, Copa Holdings SA holds a P/E ratio of 9.34. The stock of the airline firm, which provides international airline passenger and cargo services, surged over two per cent YTD and about 18 per cent YoY.

The COA stock rose over 26 per cent quarter-to-date through Monday, November 28, and it was at its 52-week high of US$ 97.63 in mid-February this year.

The net profit of Copa Holdings was US$ 115.9 million on revenue of US$ 809.4 million in Q3 FY22, as compared to a profit of US$ 104 million in the same quarter of 2019. Notably, the company's Q3 FY22 revenue surged 14.3 per cent from the same period of fiscal 2019.

MakeMyTrip Limited (NASDAQ: MMYT)

The Nasdaq-listed Indian online travel firm MakeMyTrip Limited, had a market cap of US$ 3.02 billion as of writing. The stock of the Gurugram-based company, which offers online travel services like airline tickets, domestic and international travel packages, reservations, etc., soared three per cent YTD and around nine per cent YoY.

The company said that the improving domestic travel had helped it to generate a better result even amid a seasonally weak quarter.

On a constant currency, MakeMyTrip Limited's gross bookings surged 126.3 per cent YoY to US$ 1.54 billion in Q2 FY23, while its adjusted operating profit was US$ 15.1 million, compared to US$ 6.6 million in Q2 FY22.

Target Hospitality Corp. (NASDAQ: TH)

As the name suggests, Target Hospitality Corp is a Texas-based hospitality firm with a P/E ratio of 29.06. The TH stock jumped close to 292 per cent YTD and around 248 per cent YoY.

Target Hospitality's revenue rose 79 per cent YoY to US$ 159.6 million in Q3 FY22, and its net income was US$ 19 million, compared to US$ 6.7 million for the preceding year's same quarter.

The adjusted EBITDA of the firm rose 125 per cent YoY to US$ 84.4 million for the three months that ended on September 30, 2022. For fiscal 2022, Target Hospitality expects its revenue to be between US$ 495 million and US$ 500 million.

First quarter fiscal 2023 earnings highlights of Bowlero Corp. (BOWL)Source: ©Kalkine Media®; © Canva Creative Studio via Canva.com

Bowlero Corp. (NYSE: BOWL)

The leading bowling center operator, Bowlero Corp's market cap was US$ 2.15 billion during writing. The company's stock, which operates several ten-pin bowling centers in the US, surged 50 per cent YTD and about 36 per cent YoY.

Bowlero Corp's revenue grew 27.2 per cent YoY and 55 per cent from the pre-pandemic level to US$ 230.3 million in Q1 FY23, while its net loss totaled US$ 33.53 million, against an income of US$ 15.56 million in Q1 FY22.

Bottom line:

Despite the strong increase in the spending numbers, the total recovery of domestic air travel still couldn't exceed the record in 2019. Consumers are still struggling with higher prices, which have impacted the demands in the travel industry.

Notably, the Bureau of Labor Statistics reported that travel fares have increased nearly 30 per cent from the previous year. However, reopening the economy from the pandemic-led restrictions has helped some gains in the sector.

But, before putting any bets, investors should do keen research on the assets while focusing on the still-hovering uncertainties in the market.


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