The travel industry was among the worst-hit by the COVID-19 pandemic last year because people were locked inside their homes for the better part of the year. However, as more people are vaccinated, and social distancing norms are relaxed, the travel industry is now showing signs of recovery.
Investors’ interest in the travel industry is evident in the ETFMG Travel Tech ETF’s (AWAY) 8.3% returns over the past three months. And, according to a survey by McKinsey, travel is the second most desired activity by its survey participants. Furthermore, on November 8, the United States ended a pandemic travel ban that had been in place for more than a year and a half.
Given this backdrop, we think it could be wise to scoop up quality travel-related stocks Expedia Group, Inc. (EXPE - Get Rating), Trivago N.V. (TRVG - Get Rating), and Travelzoo (TZOO - Get Rating) to capitalize on the industry’s recovery.
Expedia Group, Inc. (EXPE)
EXPE is a Bellevue, Wash.-based online travel company that operates through retail, B2B, and Trivago segments. Its brand portfolio includes Brand Expedia, Vrbo, Hotels.com, Orbitz, Travelocity, and Wotif. In addition, it offers a range of travel and non-travel verticals, including corporate travel management, airlines, travel agents, online retailers, and financial institutions.
On November 2, 2021, EXPE announced that American Express Global Business Travel (GBT) had completed the acquisition of its Egencia holding. Ariane Gorin, President, Expedia for Business, said, “Closing this deal, including our long-term agreement to provide lodging supply to GBT, is an important step forward in our ambition to power the entire travel ecosystem and help all of our partners achieve their goals.”
For the third quarter, ended September 30, 2021, EXPE’s revenues increased 97% year-over-year to $2.96 billion. The company’s adjusted EBITDA increased 181% year-over-year to $855 million. Also, its adjusted net income came in at $553 million, versus a $31 million loss in the year-ago period.
For the current quarter, ending December 31, 2021, analysts expect EXPE’s revenues to increase 148.4% year-over-year to $2.29 billion. Its EPS for its fiscal year 2022 is expected to increase 1,211.3% year-over-year to $6.89. Over the past year, the stock has gained 46.1% in price to close yesterday’s trading session at $188.00.
EXPE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. EXPE has a B grade for Growth and Quality. In the 77-stock Internet industry, it is ranked #7.
In addition to the POWR Rating grades I have stated above, one can see EXPE’s ratings for Value, Momentum, Stability, and Sentiment here.
Trivago N.V. (TRVG)
Germany-based global hotel and accommodation search platform provider TRVG allows travelers to make informed decisions by personalizing their search for accommodations and providing them with relevant information. As of September 30, 2021, it offered access to more than five million hotels and other types of accommodation across 190 countries.
On October 26, 2021, TRVG announced its partnership with Huawei to launch Trivago app on Huawei’s AppGallery, thus enabling users to compare millions of accommodations worldwide from various booking sites. This partnership is expected to help TRVG expand its reach and gain new customers.
For the third quarter, ended September 30, 2021, TRVG’s revenues increased 129% year-over-year to €138.6 million ($160.67 million). The company’s net income came in at €5.50 million ($6.40 million) compared to a €2.30 million ($2.68 million) loss in the year-ago period. Its adjusted EBITDA increased 154% from the same period last year to €15.50 million ($17.96 million).
Analysts expect TRVG’s revenues for the quarter ending March 31, 2022, to increase 221% year-over-year to $145.57 million. Its EPS for its fiscal year 2022 is expected to grow 225% year-over-year to $0.05. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 81.4% in price to close yesterday’s trading session at $2.83.
TRVG’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. It has a B grade for Growth, Sentiment, and Quality.
It is ranked #6 in the Internet industry. Click here to see TRVG’s additional POWR ratings for Value, Momentum, and Stability.
Travelzoo (TZOO - Get Rating)
TZOO is an internet media company that provides travel, entertainment, and local deals from travel and entertainment companies and local businesses in Asia Pacific, Europe, and North America. The New York City-based concern serves airlines, cruise lines, vacation packages, tour operators, car rental companies, and travel agents.
On August 13, 2021, TZOO received the highest possible ranking for consumer satisfaction from German magazine FOCUS-MONEY for the third consecutive year. It also received the ‘Bestnote’ ranking in the travel deals category.
TZOO’s revenues increased 14% year-over-year to $15.70 million for the third quarter, ended September 30, 2021. The company’s gross profit increased 16.8% year-over-year to $12.70 million. Also, its EPS came in at $0.22 compared to a $0.12 loss in the year-ago period.
Analysts expect TZOO’s revenues for the fourth quarter, ending December 31, 2021, to increase 66.2% year-over-year to $20.75 million. Its EPS for its fiscal year 2021 is expected to grow 480% year-over-year to $0.57. The stock has gained 29% in price over the past year to close yesterday’s trading session at $10.53.
It is no surprise that TZOO has an overall B rating which translates to a Buy in our POWR Rating system. TZOO has an A grade for Quality, and a B grade for Growth and Value.