Travel stocks have taken a hammering this year as demand for hotels and airfares has all but ground to a halt on the back of COVID-19 lockdown orders confining would-be travelers to their homes. However, in better news for the group, Dr. Anthony Fauci told CBS This Morning last month that summer travel was possible, providing virus transmission rates continue to decline.
Graham Turner, CEO of Australian travel agency Flight Centre, shares Dr. Fauci's cautiously optimistic view. "My feeling is, and this is in places like Southeast Asia, Australia, and North America, the domestic side of things will start picking up, start returning to normal, mainly on government dictates, in June," Turner told CNBC.
If states do begin to relax travel restrictions, pent-up demand should help to kickstart the industry. According to a recent survey conducted by Harris Poll, 60% of Americans would visit a hotel within six months of the virus curve flattening. Let's review three travel giants that may be worth adding to your trading itinerary.
Booking Holdings Inc. (BKNG)
With a market value of almost $60 billion, Booking Holdings Inc. (BKNG) provides travel and restaurant online reservation services globally. The owner of popular go-to travel sites Booking.com and Priceline.com reported first quarter adjusted earnings of $3.77 per share on revenues of $2.29 billion. While both figures declined substantially from the year-ago period, CEO Glenn Fogel noted that the firm's variable cost structure and strong liquidity placed it in a position to increase market share following the crisis. As of May 8, 2020, Booking Holdings stock has slumped nearly 30% on the year but has bounced back 4.91% over the past month.
Booking shares rallied from the lower trendline of a rising wedge pattern to close above the 50-day simple moving average (SMA) Thursday, indicating the bulls' willingness to defend the $1,400 level. Those who buy here should set a take-profit order near $1,820, where the price encounters a confluence of resistance from a horizontal line and the falling 200-day SMA. Protect capital with a stop placed beneath the May low at $1,356.
Expedia Group, Inc. (EXPE)
Seattle-based Expedia Group, Inc. (EXPE) operates as an online travel company, offering services for lodging, airline tickets, rental cars, and cruises. Wall Street expects the travel giant to report earnings per share (EPS) of $1.58 when it discloses first quarter results after the closing bell on May 20 – about $1 below the reported figure for the same quarter last year. The stock should see continued support after CNBC reported last month that private equity firms Apollo Group and Silver Lake Partners are in discussions to purchase a $1 billion stake in Expedia Group. Trading at $66.46, with a market capitalization of $9.37 billion and offering a 2.11% dividend yield, the stock has gained 17.61% year to date, outperforming the travel services industry over the same period by 10% as of May 8, 2020.
Expedia shares broke out from an ascending triangle in late April but have retraced to the pattern's top trendline, which now provides support at $85. Traders who buy the pullback should look for a move up to $93, where the stock is likely to find significant resistance from the prominent November 2019 swing low. Cut losses if the price falls below $60, as this invalidates the bullish trade setup.
Marriott International, Inc. (MAR)
Marriott International, Inc. (MAR) operates hotel, residential, and timeshare properties globally. Analysts forecast the hotel chain behind Marriott and Sheraton to take a bottom-line hit of 33% from the March 2019 quarter when it posts first quarter earnings ahead of the open on Monday, May 11. The company has enhanced its cash position through a $1.5 billion one-year revolving-credit facility and implemented a cost-cutting program to manage the steep drop in demand caused by the pandemic. As of May 8, 2020, Marriott stock has a $27.89 billion market cap and is trading 16.47% higher over the past month.
The hotel's share price has hugged a short-term trendline extending back to early April but pushed higher yesterday on improving sentiment toward the sector. Those who buy in this vicinity should bank profits near $116, where the stock runs into crucial resistance from the floor of a previous trading range. Exit the trade with a small loss if price closes beneath the dotted blue trendline. The play offers a favorable risk/reward ratio of 1:5 ($6 risk per share vs. $30 profit per share), assuming an execution near Thursday's $85.98 closing price.