New claims for unemployment insurance continue to trend lower as the result of a slow but steady hiring trend by employers. If this trend continues, the public may feel more confident about their jobs and be more inclined to increase spending, particularly on leisure travel - in other words, taking a much-needed vacation. If you believe this may be the case, investing in companies that benefit from vacation or leisure travel may be of interest.

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All Aboard!

Cruising has become one of the largest vacation industries. Carnival Corp. (NYSE: CCL) operates 88 cruise ships, several hotels and lodges, and offers other vacation activities. Cruises offer the ultimate bargain for the leisure traveler with an all-inclusive vacation. Carnival is near its 52-week high and at 70% of its five-year peak price - a sign that the recovery in leisure travel has begun but not yet fully reached its peak.

Flying High

The airlines have been faced with many headwinds over the years, from the cost of fuel to union problems and the loss of business from leisure travelers. Southwest Airlines (NYSE: LUV) has historically been one of the stronger airlines because the company has not been weighed down with current and legacy union difficulties. However, like all of its peers, Southwest will greatly benefit from the return of the leisure traveler. It is trading at 72% of its five-year peak and has seen a very strong recovery of 2.3 times its lows from early 2009.

Riding On Route 66

Hertz Global Holdings (NYSE: HTZ) is a global leader in the rental car market. Hertz has seen a sharp decline from its five-year peak price, trading at only 44% of its high. The rental car market has faced many issues, particularly related to its fleet and its ability to reduce used car inventory. Hertz and its peers rely heavily on the ability to secure short-term loans from banks to procure rental fleets. This has been one of the most severe headwinds during the recent economic crisis. However, a return of the leisure and business traveler, combined with improving fleet management and the increasing uptake of ancillary services like GPS, should translate to higher returns for these stocks.

"It's A Small World..."

Perhaps the place most synonomous with vacation, Walt Disney World of the Walt Disney Co. (NYSE: DIS) has the strongest correlation to the leisure traveler. Disney's amusement parks rely almost entirely on an improvement in the employment status and strong customer confidence. The company has returned to its five-year peak level and has seen a 210% increase since its lows in early 2009.

It's Time To Travel

Continued improving unemployment trends should translate into strengthening confidence levels. Taken together, these should be leading indicators that the leisure travel business should enter a robust period, and companies that depend on these leisure travelers should trend toward peak stock performance levels. (For more, check out Travel By Buying Power.)

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Tickers in this Article: DIS, CCL, HTZ, LUV

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