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With the summer months upon us, many travel-related stocks are poised to rise with pent up-demand lingering from the pandemic.
Some of the beneficiaries include airlines, cruise ships, travel agencies, hotels, and vacation rentals. These travel-related companies are contributing to the strong performance of the top-rated Zacks Leisure and Recreation Services Industry which is in the top 23% of over 250 Zacks industries.
Year to date the Zacks Leisure and Recreation Industries collective total return including dividends is +29% to easily top the S&P 500’s +14% and roughly match the Nasdaq’s strong performance.
Let’s take a look at three highly-ranked stocks in the industry that currently boast a Zacks Rank #1 (Strong Buy).
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Bluegreen Vacations (BVH)
Starting out is Bluegreen Vacations which is a holding corporation that operates as a vacation ownership company. Bluegreen's markets and sells vacation ownership interests and manages resorts in leisure and urban destinations.
What stands out about Bluegreen stock is its price-to-earnings valuation at 8.3X forward earnings despite shares of BVH already up +37% YTD. This is reason to believe Bluegreen’s strong performance could continue as BVH still trades at a considerable discount to the industry average of 21.7X and nicely beneath the S&P 500’s 20.1X.
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Furthermore, earnings estimates have trended higher over the last 60 days offering further support. Trading at $34 a share, Bluegreen’s earnings are now forecasted to climb 17% this year and jump another 14% in FY24 at $4.65 per share.
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Royal Caribbean Cruises (RCL)
Taking the crown among cruise liners is Royal Caribbean. Increased bookings amid pent-up demand lingering from the pandemic is starting to reiterate the cruise company’s massive earnings potential.
In addition to its Zacks Rank #1 (Strong Buy) Royal Caribbean also has an “A” Style Scores grade for Growth. In correlation to strong booking demand, Royal Caribbean’s fiscal 2023 earnings estimates have soared 46% over the last 60 days with FY24 EPS estimates rising 21%.
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Royal Caribbean’s pandemic hiatus is behind it with annual earnings now projected to skyrocket to $4.71 per share compared to an adjusted loss of -$7.50 a share in 2022. Plus, fiscal 2024 earnings are expected to climb another 44% at $6.79 per share.
More importantly, this year’s anticipated sales of $13.13 billion would be up 48% from last year and also eclipse 2019 pre-pandemic sales of $10.95 billion by 20%. At $94 a share, Royal Caribbean’s P/E valuation of 19.8X forward earnings is sitll below the industry average and the benchmark.