Pfizer, Inc. (PFE) has recently announced that its coronavirus vaccine has completed clinical trials and is 95% effective. The vaccine is ready to get “emergency approval” from the FDA within the next couple of weeks. The positive news surrounding coronavirus vaccine trials has done wonders for travel stocks, many of which have experienced significant gains over the last few days.
The travel industry was the worst hit during the pandemic, and the stock prices of travel companies suffered. However, the industry is poised to recover in 2021 and beyond based on the success of medical science to kill the virus. So, this may be the best time to invest in travel stocks.
Companies like Booking Holdings, Inc. (BKNG), Trip.com (TCOM), Expedia Group, Inc. (EXPE), and MakeMyTrip Limited (MMYT) provide online travel-related services. These travel websites will be the first to recover once lockdown restrictions are removed across the globe and people start traveling again. These companies are taking effective steps to survive during these times and come out stronger on the other side.
Booking Holdings, Inc. (BKNG)
BKNG operates as a travel agency and an online travel-related bookings portal. The company’s network of agents provides access to travel destinations around the world. BKNG’s stock has gained 1.3% so far this year.
Kayak, which is a part of BKNG, has recently partnered with Lonely Planet to release Best in Travel Awards 2021 with a focus on sustainability, community, and diversity.
For the third quarter ended September 2020, the company reported better than expected results despite the hard challenges faced due to the spread of the coronavirus. The company managed to see a 47% decline in revenue and a 43% decline in bookings, compared to the same period last year.
BKNG is expected to witness revenue growth of 52.3% in 2021. The company’s EPS is estimated to grow 3125% in 2021 and at a rate of 2.1% per annum over the next five years.
How does BKNG stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #7 out of 58 stocks in the Internet industry.
TCOM provides travel-related services in China. The company runs an online platform that enables users to book travel arrangements and hotels along with offering packaged tours and corporate travel management. TCOM’s stock has gained 4.4% so far this year.
TCOM has recently entered into a three-year partnership with the Singapore Tourism Board to promote Singapore as the preferred destination for travel. Further, the company has partnered with Bangkok Airway’s to provide frequent flyer benefits to users making their bookings through trip.com.
For the second quarter ending June 2020, the company witnessed a recovery in their business from the steep decline caused by the pandemic. The company’s accommodation reservation revenue increased by 9% compared to the previous quarter. Further, TCOM’s corporate travel revenue also improved by 29% from the previous quarter.
TCOM is expected to witness revenue growth of 67.7% in 2021. The company’s EPS is estimated to grow 338% in 2021 and at a rate of 0.6% per annum over the next five years.
It’s no surprise that TCOM is rated a “Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, and a “B” in Buy & Hold Grade, Peer Grade, and Industry Rank. In the 115-stock China industry, it is ranked #18.
Expedia Group, Inc. (EXPE)
EXPE is an online travel company that helps users book travel accommodations, tickets, car rentals, along with other destination services. The company operates in the United States and internationally. EXPE’s stock has gained 13.7% so far this year.
EXPE is currently working on a complete tech overhaul of its business operations along with simplifying its corporate organization. The company is taking steps towards using data analysis and artificial intelligence to better target their services. EXPE has also recently laid-off employees to help with the efficiency of the company.
For the quarter ended September 2020, the company’s revenue and the number of bookings fell 58% and 68% respectively. However, the company is working towards realizing their long-term strategy. They have upgraded their Brand Expedia, Hotwire, and Vrbo iOS apps to increase functionality and bring them in line with the requirements of iOS 14.
EXPE is expected to witness revenue growth of 45.5% in 2021. The company’s EPS is estimated to grow by 108.6% in 2021.
EXPE’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and Industry Rank. In the 58-stock Internet industry, it is ranked #14.
MakeMyTrip Limited (MMYT)
MMYT provides travel solutions and products in India and internationally. The company primarily assists with hotel accommodation and ticketing. MMYT’s stock has gained 8.5% so far this year.
MMYT is currently focusing on conserving cash-in-hand to better position itself once the travel market recovers. MMYT is automating its post-sales services as much as possible to make their operations more efficient. The company is also working on reducing its expenses related to marketing.
For the quarter ended in September 2020, the company has witnessed a gradual sequential improvement in revenue. The company has also raised $100 million in financing to help with liquidity.
MMYT is expected to witness revenue growth of 224.3% in 2022. The company’s EPS is estimated to grow 43.5% in 2021 and at a rate of 48.6% per annum over the next five years.
It’s no surprise that MMYT is rated a “Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade and Industry Rank. In the 58-stock Internet industry, it is ranked #18.
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BKNG shares were trading at $2,102.74 per share on Wednesday afternoon, up $21.49 (+1.03%). Year-to-date, BKNG has gained 2.39%, versus a 13.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…