Revenge travel or the phenomenon of pent-up demand stemming from the COVID-19-related lockdowns may be a fading consumer behavior. But that doesn’t mean travel stocks to buy have suddenly become irrelevant as an investment opportunity. No, if anything, investors may have a viable prospect for sustained growth on their hands.
Sure, people aren’t rushing to get out of the home anymore. The worst of the pandemic is (probably) behind us. However, Covid-19 also sparked a reprioritization about what’s really important. Put another way, people are realizing that life is short and it’s the experiences that we enjoy with loved ones that truly matter. And consumer behavioral analytics reflect this shift in thinking.
What’s even better is that such a shift is materializing even under challenging economic circumstances. Therefore, it’s possible this behavioral trend may have legs. With that in mind, below are three travel stocks investors should put on their watch list.
Southwest Airlines (LUV)
From a charting perspective, discount airliner Southwest Airlines (NYSE:LUV) doesn’t seem all that attractive. In the past 52 weeks, it’s down about 23%. Various headwinds and corporate bubbles contributed to an uneven share price performance. However, with households prioritizing their vacations in the post-Covid environment, LUV could be an intriguing proposition.
First, the valuation appears attractive. Right now, LUV stock trades hands at 0.69X trailing-year revenue. Between the first quarter of 2023 and Q1 2024, this metric stood at 0.79X. Further, in Q2 of last year, LUV averaged a revenue multiple of 0.94X. The thinking here is that if the market can accept Southwest at 0.94X, the equity has room to grow.
Second, that’s exactly what analysts are projecting. By the end of this year, experts believe that sales could rise 5.3% to $27.48 billion. Moreover, the high-side estimate calls for $28.39 billion, a sizable leap from last year’s print of $26.09 billion. Therefore, Southwest is an intriguing idea for travel stocks to buy.
Wynn Resorts (WYNN)
One of the powerhouse names in the casino and resorts arena, Wynn Resorts (NASDAQ:WYNN) should see a move higher if travel prioritization continues to inspire consumer spending habits. Now, it must be said that Wall Street isn’t exactly sold on WYNN stock. Since the beginning of the year, shares have tumbled more than 10%. In the past 52 weeks, they’re down almost 22%.
However, it’s also fair to point out that WYNN stock appears to have stabilized since late 2022. If so, the relative valuation of the company can be intriguing for speculators. Right now, WYNN trades at 1.39X trailing-year sales. In the past year, this metric stood at 2.38X. In Q1 of last year, it shot up to an average of 3.38X. Theoretically, then, the casino giant has much room to grow.
Analysts do believe in that growth. For fiscal 2024, they anticipate that the top line could expand by 12.2% to $7.33 billion. Moreover, the high-side estimate lands at $7.53 billion. It’s one of the travel stocks to keep close tabs on.
Norwegian Cruise Line (NCLH)
Falling under its namesake industry, Norwegian Cruise Line (NYSE:NCLH) makes an attractive case for travel stocks to buy. Generally speaking, cruises offer big bang for the buck. Further, many of these operators facilitate trips in international regions. That’s good for American tourists, where the relative strength of the dollar enhances purchasing power.
However, what made me look at NCLH stock relative to its top two competitors is the valuation. Right now, shares trade hands at 0.96X trailing-year sales. That’s actually a discount to what investors saw in the past year at 1.16X. Further, in Q2 of last year, the average multiple soared to 1.49X. Again, if the market operates in an ebb-and-flow cycle, NCLH may have room to run.
For fiscal 2024, analysts believe that revenue may hit $9.37 billion. If so, that would represent a 9.6% increase from last year’s haul of $8.55 billion. Further, in fiscal 2025, sales may eclipse the $10 billion mark. Norwegian just might be contextually discounted.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.