6 Top Travel-Related Stocks

Summer vacation is still a few months away, but it's not too early to add some high-quality travel-related stocks to your portfolio. Here are some experts favorite picks among hotels, airlines and other travel stocks: Bernie Schaeffer, Schaeffer's Investment Research: Marriott Our latest featured recommendation is Marriott International . After touching a five-month high in late February, the shares of the hospitality concern took a breather, but found support at the $119-$120 area -- which represents a 10% year-to-date gain. Plus, the shares are forming a bull flag on the charts, with support emerging from the 200-day moving average. Considering this, we are recommending a new long position on the shares. Although five analysts already consider the stock to be aStrong Buy, nine still give it a Hold rating. A round of upgrades could help propel the stock higher, too. What's more, data show Marriott International with a 50-day put/call volume ratio of 1.82 that ranks in the 76th annual percentile. This means that long puts have been much more popular than calls of late, which could push the stock higher as bears begin to hit the exits. Similarly, Marriott International's Schaeffer's put/call open interest ratio of 5.72 sits in the 92nd percentile of its annual range, suggesting short-term option players have rarely been more put-heavy during the past 12 months. Traders should target a move up to $140, with a stop below $118. John Staszak, Argus Research: Hilton Worldwide Holdings We are upgrading Hilton Worldwide Holdings from Hold to Buy. We think that Hilton's asset-light business model, in which it franchises rather than owns hotels, provides a competitive advantage that should result in above-peer-average earnings growth over time. The company also benefits from a strong brand, as evidenced by its industry-leading loyalty program, Hilton Honors, with approximately 85 million members. Some 60% of all reservations at Hilton hotels are booked by loyalty program members. Hilton is set to increase its global market share, with 5% of existing rooms and about 20% of rooms currently under development worldwide. In the U.S., where it has a low double-digit market share, Hilton is constructing about a quarter of the rooms currently under development. Through its large scale, Hilton provides franchisees with marketing and technology support that competitors cannot match. The shares appear attractively valued at 21.4-times our revised 2019 EPS estimate. Our rating is now Buy, with a target price of $96. Todd Shaver, BullMarket: Expedia With the global travel market estimated at $1.7 trillion and growing 5% per year, online travel companies are primed to grow steadily as they expand globally and diversify their offerings. Expedia is at the forefront of the industry. The company currently has over 5% of this profoundly fragmented market and its slice is growing at more than double the pace of its rivals. We're looking for 12% growth compounded yearly over the next five years, thanks to management's hard work pivoting the operation away from lackluster legacy businesses toward the sweetest spots around the planet. Expedia now generates nearly half of its revenue internationally and the overall pool is expanding more than twice as fast as the Travel opportunity as a whole. We've watched this company refuse to chase the kinds of utility transactions that have turned into a low-growth and low-margin trap for rivals. That strategy is being rewarded now. The secret to this great company is diversification into hospitality and especially the high-growth home rental market with brands such as HomeAway and Vrbo. This segment of Expedia's business grew a whopping 40% last year. A pair of key acquisitions last year -- Pillow and ApartmentJet -- add value to the service and will help spur growth even further. With a dominant position in the surging online travel industry, a diversified product line and a global focus, Expedia is at the forefront of the world's ongoing embrace of online ticketing. The stock is up 8% year to date and there's plenty more to come. Jim Corridore, CFRA Research's The Outlook: Delta Air Lines Our latest Focus Stock is Delta Air Lines , which carries CFRA's highest investment recommendation of five stars, or Strong Buy. We expect Delta to benefit in 2019 from a strong demand in the sector that should lead to rising fares and improved revenues, while at the same time we think fuel costs, Delta's second largest cost category after labor, are likely to decline on lower oil prices. Delta is the third largest U.S. airline, as measured by revenues and revenue passenger miles (RPMs, a proxy for how many people are flying). The company gets a larger percentage of its revenues from business travelers than peers, which allows Delta to generate better financial results than the peer average in terms of revenues per available seat mile, or RASM. We expect the company to benefit not only from strong demand, but also from an increasingly diverse revenue base as it sells ancillary revenues including seat assignments, baggage fees, ticket change fees and other unbundled items that used to come free, but that Delta and other airlines now charge flyers. We think the airline is purposefully sacrificing its PLF number -- or passenger load factor -- to drive unit revenues higher. With total system passenger load factor above 80%, we think that Delta is in a good position to attempt further fare increases, as flights are already pretty full. You can raise fares in several different ways: increasing fares: holding more seats for later bookers, who tend to pay more and by increasing the percentage of business travel seats you sell, which raises your average selling price as business and first-class seats cost a lot. We expect Delta to pull on all three of these levers in an attempt to raise unit revenues, and the company's overall first quarter guidance is likely to be significantly higher than the peer average. Our 12-month target price of $70 values the shares at an Enterprise Value-to-EBITDAR (Earnings before interest, taxes, depreciation, and amortization plus aircraft rent; this is a way to equalize those airlines that mortgage planes with those that lease them) multiple of 7 times our 2019 estimate on this metric. We also note that Delta shares currently sport a dividend yield near 2.8%, well above the peer average, as the company uses its cash generating abilities to provide an income component to shareholders. John Buckingham, The Prudent Speculator: Carnival Corp. Shares of Carnival Corp. sank more than 10% last week. Despite reporting fiscal first quarter top and bottom-line results that exceeded consensus analyst expectations, investors reacted negatively to the cruise company's cut in its full-year guidance. For the quarter, Carnival posted adjusted earnings per share of 49 cents, which topped consensus expectations of 44 cents. Revenue for the period of $4.67 billion came in above forecasts calling for $4.31 billion. Based on current booking trends, the company continues to expect full year 2019 constant currency net cruise revenue to be up approximately 5.5%, with capacity growth of 4.6%. Full year 2019 adjusted earnings per share should now be in the range of $4.35 to $4.55, compared to December guidance of $4.50 to $4.80. By way of contrast, adjusted EPS in 2018 came in at $4.26. Not surprisingly, we think the selloff was overdone. We still believe that Carnival is again being conservative in its forecasts, as this has shown up in net yield predictions the past three years. Why does this matter? We think that there is potential upside to Carnival's current outlook if demand stays steady, however if demand slows, we believe that the EPS outlook has less downside risk. We also note that CCL shares are trading at just slightly above 11 times the adjusted earnings expectations for the next 12 months. While near-term headwinds will continue to blow, we maintain our long-term optimism on the stock and the overall cruise industry space, given favorable demographic trends and the fact that there are still meaningful growth opportunities in emerging economies, which are encouraging for global revenue diversification and the ability to rapidly reach a new customer base. The shares sport a 3.9% yield. Our target price is $80. Crista Huff, Cabot Undervalued Stocks Advisor: Royal Caribbean Cruises Royal Caribbean Cruises delivers travelers to desirable and exotic destinations on all seven continents. The company operates a total of 59 ships, with 17 on order, that are wholly owned, or jointly owned with companies in Germany (TUI Cruises) and Spain (Pullmantur Cruceros). The company's brands include Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and Silversea Cruises. Royal Caribbean ended a joint venture with China in 2018. Aging baby boomers are tapping into retirement accounts and spending money on leisure travel, supporting demand and pricing for cruise lines. The company is also focused on attracting the millennial generation. CEO and Chairman Richard Fain recently purchased $1,990,000 of Royal Caribbean shares. Wall Street expects earnings per share to grow 13.1% and 11.4% in 2019 and 2020 (December year end). The 2019 price/earnings ratios is 11.9. The stock pays a quarterly dividend of 70 cents per share, currently yielding 2.3%. Royal Caribbean announced a dividend increase of 16%-28% in each of the last five years during the month of September. The share count has been slowly declining for many years via share buybacks. Royal Caribbean is an undervalued, large-cap growth & income stock. The stock has traded steadily between 113-121 for eight weeks, presumably gathering strength for its next move. New investors can potentially earn a 15% capital gain as RCL returns to its 2018 high of 132, at which time the stock will still be undervalued (based on current earnings estimates). I rate the stock a Strong Buy.

6 Top Travel-Related Stocks

Summer vacation is months away, but it's not too early to add these high-quality travel-related stocks to your portfolio.

Columnist Conversation

Mad Money Tonight With Jim Cramer

Getting on My Peloton for a Ride

Exiting Some Nice Gainers -- JPM, CERN

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.