Pfizer, Inc. (PFE) recently announced that its coronavirus vaccine has completed clinical trials and is 95% effective. The vaccine is set to gain “emergency approval” from the FDA in the coming weeks. The positive news about coronavirus vaccine trials has done wonders for travel stocks, many of which have seen big gains in recent days.
The travel industry was hit the hardest during the pandemic and the share prices of travel agencies suffered. However, the industry is set to recover in 2021 and beyond based on the success of medical science in killing the virus. So, this might be the best time to invest in travel stocks.
Companies like Booking Holdings, Inc. (BKNG), Trip.com (TCOM), Expedia Group, Inc. (EXPED) 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 world and people start traveling again. These companies take 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 online booking portal related to travel. The company’s agent network provides access to travel destinations around the world. BKNG stock has gained 1.3% so far this year.
Kayak, which is part of BKNG, recently partnered with Lonely Planet to launch the 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 difficult challenges faced due to the spread of the coronavirus. The company managed to record a 47% drop in revenue and a 43% drop in bookings, compared to the same period last year.
BKNG is expected to experience revenue growth of 52.3% in 2021. The company’s EPS is expected to grow by 3,125% in 2021 and at a rate of 2.1% per year over the next five years.
How does BKNG compare to POWR odds?
A for trade
A for Buy and keep note
A for peers
A for industry ranking
A for the overall POWR rating
You can’t ask for better. The stock is also ranked 7th out of 58 stocks in the the Internet industry.
TCOM provides travel related services to China. The company operates an online platform that allows users to book trips and hotels, while offering organized tours and business travel management. TCOM stock has gained 4.4% so far this year.
TCOM recently entered into a three-year partnership with the Singapore Tourism Board to promote Singapore as a premier travel destination. In addition, the company has partnered with Bangkok Airway to provide frequent flyer benefits to users booking through trip.com.
For the second quarter ending in June 2020, the company saw a resumption of its activity after the sharp drop caused by the pandemic. The company’s accommodation reservation revenue increased 9% from the prior quarter. In addition, TCOM’s business travel revenue also improved 29% from the previous quarter.
TCOM is expected to experience revenue growth of 67.7% in 2021. The company’s EPS is expected to grow 338% in 2021 and at a rate of 0.6% per annum over the next five years.
It is not surprising that TCOM is rated “Buy” in our POWR rating system, with a rating of “A” in the Trade category and a “B” in the Buy and Hold category, the Peer category and the industry ranking. In stock 115 China industry, it is ranked # 18.
Expedia Group, Inc. (EXPED)
EXPE is an online travel company that helps users book travel accommodation, tickets, car rentals, and other destination services. The company operates in the United States and internationally. EXPE share has gained 13.7% so far this year.
EXPE is currently working on a complete technological overhaul of its business operations as well as on the simplification of its corporate organization. The company is taking steps to use data analytics and artificial intelligence to better target its services. EXPE also recently laid off employees to help make the business more efficient.
For the quarter ended September 2020, the company’s revenue and the number of reservations decreased by 58% and 68% respectively. However, the company is working towards achieving its long-term strategy. They upgraded their iOS Brand Expedia, Hotwire, and Vrbo apps to increase functionality and bring them into compliance with iOS 14 requirements.
EXPE is expected to experience 45.5% revenue growth in 2021. The company’s EPS is expected to grow 108.6% in 2021.
EXPE’s strong fundamentals are reflected in its POWR ratings. It has a “Strong Buy” rating with an “A” in the Trade Grade, Buy & Hold Grade and Industry Rank categories. In the Internet industry of 58 stocks, it is ranked No. 14.
MakeMyTrip Limited (MMYT)
MMYT provides travel solutions and products in India and abroad. The company mainly helps with hotel accommodation and ticketing. MMYT stock has gained 8.5% so far this year.
MMYT is currently focused on conserving cash to better position itself once the travel market recovers. MMYT automates its after-sales services as much as possible to make their operations more efficient. The company is also working to reduce its marketing expenses.
For the quarter ended September 2020, the company experienced a gradual sequential improvement in its revenue. The company also raised $ 100 million in funding to help with liquidity.
MMYT is expected to experience revenue growth of 224.3% in 2022. The company’s EPS is expected to grow 43.5% in 2021 and at a rate of 48.6% per year over the next five years.
It’s no surprise that MMYT is rated “Buy” in our POWR rating system, with an “A” rating in both the Commercial Category and Industry Ranking. In the 58-stock the Internet industry, it is ranked # 18.
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BKNG stock was trading at $ 2,102.74 per share on Wednesday afternoon, up $ 21.49 (+ 1.03%). Year-to-date, BKNG has gained 2.39%, compared to a 13.87% increase in the benchmark S&P 500 over the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist who is passionate about providing in-depth information on investing and personal finance. Recently he has focused on the stock market and specializes in valuing high growth stocks. Following…