The travel industry suffered major pullbacks amid the pandemic, and lingering logistic disruptions continue to hinder the optimal operationality of the sector. Recently, Jennifer Clark Fugolo, VP of Advancement for the American Hotel and Lodging Association, said that approximately 97% of hotels are experiencing a staffing shortage.
However, travel demand remains robust, despite the record high inflation and recession worries. A study revealed that 71% of Americans feel they desperately need a vacation this year. Americans are actively heading off on post-pandemic holidays.
According to Marriott International, Inc.’s (MAR) finance chief Leeny Oberg- “Americans are seeking out leisure travel after years of deferred trips.” She added, “We are not seeing any signs of any demand pullback at this point. People want to get out there and travel.”
Furthermore, the global leisure travel market size is estimated to grow at a CAGR of 22.6% from 2021 to 2027.
Given the surge in leisure travel demand, it could be wise to add fundamentally sound travel stocks Bluegreen Vacations Holding Corporation(BVH), Playa Hotels & Resorts N.V.(PLYA), Travel + Leisure Co. (TNL), and Target Hospitality Corp. (TH) to your watchlist now.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It administers resorts in tourist and metropolitan areas and markets and sells vacation ownership interests (VOI). Additionally, the business offers services for resort management, mortgages, titles, reservations, and building design and development.
On August 3, 2022, Alan B. Levan, BVH’s Chairman and CEO, said, “In July, we acquired two resort buildings comprising 46 units in Vail, Colorado, further expanding our footprint in the West. We hope to have this exciting new location available for use by our owners in 2023.”
He added, “We are also commencing construction of new resort units in Big Bear, California; the Smoky Mountains of Tennessee; and Orlando, Florida, including our popular Presidential Units.”
BVH’s total revenue came in at $235.60 million for the second quarter ended June 30, 2022, up 21.8% year-over-year. Its free cash flow increased 35.6% year-over-year to $61.05 million. Moreover, the company’s sales of VOIs increased 57.1% year-over-year to $144.26 million.
Analysts expect BVH’s revenue to increase 12.7% year-over-year to $853.47 million in the current year. Its EPS is estimated to grow 38% year-over-year to $3.85 in 2022. Over the past year, the stock has gained 21.6% to close the last trading session at $23.81.
BVH’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BVH also has an A grade in Value, Sentiment, and Quality. Within the B-rated Travel - Hotels/Resorts industry, it is ranked first among 22 stocks. Click here for the additional POWR Ratings for Momentum, Growth, and Stability for BVH.
Playa Hotels & Resorts N.V. (PLYA)
PLYA and its subsidiaries own, build, and manage resorts in prestigious coastal locations in Mexico and the Caribbean. The company runs a portfolio of 22 resorts with 8,366 rooms located in Mexico, Jamaica, and the Dominican Republic.
PLYA recently added Seadust Cancun Family Resort to its portfolio of managed all-inclusive resorts. This demonstrates PLYA’s proficiency as a management company.
PLYA’s total net revenue came in at $214.09 million for the second quarter ended June 30, 2022, up 72.1% year-over-year. Its adjusted EBITDA increased 169.3% year-over-year to $61.70 million. Moreover, the company’s net income came in at $30.50 million, compared to a net loss of $7.80 million in the year-ago period.
PLYA’s revenue is expected to increase 54.8% year-over-year to $827.53 million in the current year. Its EPS is estimated to increase 183.3% year-over-year to $0.40 in 2022. Over the past year, the stock has gained 2% to close the last trading session at $7.01.
PLYA has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #2 in the Travel - Hotels/Resorts industry. Beyond what is stated above, we’ve also rated PLYA for Momentum and Stability. Get all the PLYA ratings here.
Travel + Leisure Co. (TNL)
TNL and its subsidiaries provide hospitality services and products in the U.S and internationally. The company operates in two segments- Vacation Ownership and Travel and Membership. The company operates approximately 245 vacation ownership resorts across the world.
On July 21, 2022, TNL completed a term securitization transaction involving the issuance of $275 million of asset-backed notes. Mike Hug, TNL’s Chief Financial Officer, said, “This transaction once again demonstrates the strength of our business model and our ability to continue to access capital, even during a time of significant market volatility and economic uncertainty.”
TNL’s revenue came in at $922 million for the second quarter ended June 30, 2022, up 15.7% year-over-year. Its net income increased 38.9% year-over-year to $100 million. Moreover, the company’s adjusted EPS came in at $1.27, up 44.3% year-over-year.
Analysts expect TNL’s revenue to increase 14.5% year-over-year to $3.59 billion in the current year. Its EPS is estimated to rise 19.4% per annum for the next five years. Moreover, the company surpassed EPS estimates in three of the four trailing quarters. Over the past year, the stock has gained 19.6% to close the last trading session at $44.18.
TNL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our POWR Ratings system. It has a B grade for Value and Quality.
TNL is ranked #5 in the same industry. Click here to see the additional POWR Ratings for TNL (Growth, Momentum, Stability, and Sentiment).
Target Hospitality Corp. (TH)
TH operates as a specialty rental and hospitality services company in North America. The company operates through four segments- Hospitality & Facilities Services – South; Hospitality & Facilities Services – Midwest; Government; and TCPL Keystone.
On July 6, 2022, TH entered into an expanded lease and services agreement with Leading National Nonprofit Supporting Critical Humanitarian Aid Solutions to offer enhanced infrastructure facility services, demonstrating its strategic diversification efforts.
TH’s revenue came in at $109.65 million for the second quarter ended June 30, 2022, up 46.2% year-over-year. Its net income came in at $22.85 million, compared to a loss of $912,000 in the prior-year period. The company’s adjusted EBITDA came in at $56.12 million, up 75.7% year-over-year.
Street expects TH’s revenue to increase 74.4% year-over-year to $508 million in the ongoing year. Its EPS is estimated to increase 2,460% year-over-year to $1.18 in 2022. Over the past year, the stock has gained 244.4% to close the last trading session at $12.26.
TH has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade in Growth and a B grade for Quality. It is ranked #6 in the same industry. We’ve also rated TH for Momentum, Stability, Value, and Sentiment. Get all the TH ratings here.
BVH shares were trading at $23.69 per share on Wednesday afternoon, down $0.12 (-0.50%). Year-to-date, BVH has declined -31.70%, versus a -11.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
4 Travel Stocks to Watch Amid Surge in Leisure Demand StockNews.com
