The Federal Reserve is yet to control the reckless inflation running at a 40-year high. However, James Thornton, CEO of Intrepid Travel, said, “Despite the rise in costs, travel bookings have more than doubled.” Moreover, the Biden administration lifted its COVID-19 testing policy for international travel early in June, providing further impetus to travel demand.
In addition, according to the U.S. Travel Association, domestic travel spending is projected to hit $941 billion in 2022 and $1.01 trillion in 2023. Also, according to the MasterCard Economics Institute, 1.50 billion additional people are estimated to fly globally in 2022.
Given the pent-up travel demand, fundamentally solid stocks Bluegreen Vacations Holding Corporation (BVH), InterContinental Hotels Group PLC (IHG), Playa Hotels & Resorts N.V. (PLYA), Target Hospitality Corp. (TH), and Travel + Leisure Co. (TNL) could be solid buys to profit from the travel industry’s recovery. These stocks are rated Strong Buy or Buy in our POWR Ratings system.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It markets and sells vacation ownership interests; and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, New Orleans, and others.
On May 2, 2022, BVH announced the completion of a private offering and sold approximately $172 million of vacation ownership interest receivable-backed Notes. The company expects this transaction to boost its future financials.
BVH’s total revenues came in at $195.13 million, up 33.3% year-over-year, for its first quarter ended March 31, 2022. Its comprehensive income came in at $15.99 million, up 437.6% year-over-year, while its EPS came in at $0.76, up 406.7% year-over-year. Also, its adjusted EBITDA came in at $31.05 million, up 144.1% year-over-year.
Analysts expect BVH’s revenue to increase 11.2% year-over-year to $841.78 million in 2022. Its EPS is expected to increase 34.8% year-over-year to $3.76 in 2022. The stock surpassed its EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 44.6% to close the last trading session at $25.28.
BVH’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Value and Sentiment and a B for Quality. Within the B-rated Travel - Hotels/Resorts industry, it is ranked first among 22 stocks. Click here for the additional POWR Ratings for Growth, Momentum, and Stability for BVH.
InterContinental Hotels Group PLC (IHG)
Headquartered in Denham, the United Kingdom, IHG owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China. Currently, the company operates around 5,991 hotels and 880,327 rooms in approximately 100 countries.
On June 8, 2022, IHG launched the '6,000 Club' in collaboration with major sports and entertainment events. This marks a great addition of 6000 exquisite hotels to the company’s portfolio, and IHG is estimated to grow by a further 30%, with more than 1,800 hotels signed in its development pipeline.
Furthermore, on May 19, 2022, IHG announced its partnership with acclaimed British artist Claire Luxton to launch a joyride series at InterContinental London Park Lane, InterContinental New York Barclay, and InterContinental Dubai Festival City, which should enhance customer experience.
IHG’s group RevPAR increased 60.8% year-over-year for the 2022 first quarter. Its net system size increased 3.4% year-over-year. Moreover, its American RevPAR increased 57.9% year-over-year. Also, its average daily rate increased 26.7% year-over-year.
IHG’s revenue is expected to come at $1.82 billion in 2022, representing a 31% year-over-year rise. The company’s EPS is expected to increase 74.2% year-over-year to $2.56 in 2022. IHG’s shares have lost 2.2% intraday to close the last trading session at $52.87.
Unsurprisingly, IHG has an overall B rating, equating to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Sentiment.
IHG is ranked #4 in the Travel - Hotels/Resorts industry. Click here to see the additional POWR Ratings for IHG (Value, Momentum, Stability, and Quality).
Playa Hotels & Resorts N.V. (PLYA)
PLYA and its subsidiaries own, develop, and operate resorts in prime beachfront locations in Mexico and the Caribbean. It holds a portfolio of around 22 resorts with 8,366 rooms in Mexico, Jamaica, and the Dominican Republic.
On May 16, 2022, PLYA and Marriott International, Inc. (MAR) announced an agreement between Francisco Martínez, the owner of Sanctuary Cap Cana, and MAR to launch MAR’s first all-inclusive extension of The Luxury Collection brand, Sanctuary Cap Cana. PLYA is expected to benefit significantly from this new business venture.
PLYA’s occupancy came in at 72.4% for the first quarter ended March 31, 2022, compared to 31.6% in the previous period. Its total revenue came in at $219.57 million, up 182.4% year-over-year. In addition, its net income came in at $42.75 million, compared to a loss of $69.75 million in the prior-year period.
Analysts expect PLYA’s revenue to be $822.03 million in 2022, representing a 53.8% year-over-year rise, while the company’s EPS is expected to increase 185.4% year-over-year to $0.41 in 2022. PLYA has lost 8.5% over the past year to close the last trading session at $6.71.
PLYA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, equating to a Buy in our POWR Ratings system.
It has a B grade for Growth, Sentiment, and Quality. It is ranked #3 in the Travel - Hotels/Resorts industry. Click here to see the additional ratings for PLYA (Value, Momentum, and Stability).
Target Hospitality Corp. (TH)
TH operates as a specialty rental and hospitality services company in North America. The company operates through four segments: Hospitality & Facilities Services – South; Hospitality & Facilities Services – Midwest; Government; and TCPL Keystone.
On May 10, 2022, Brad Archer, President, and CEO, said, “Our superior operating capabilities and network flexibility provide unmatched solutions for our customers dynamic labor allocation requirements. These elements continue to support top tier operating margins and Target’s strong financial position, as evidenced by a 60% reduction in Target’s net leverage ratio since 2021.”
TH’s total revenue for the first quarter ended March 31, 2022, came in at $80.33 million, up 76.6% year-over-year. Its comprehensive income came in at $476,000, compared to a loss of $13.16 million in the year-ago period. Its EPS came in at $0.01, compared to a loss per share of $0.14. Also, its adjusted EBITDA came in at $33.38 million, up 109.2% year-over-year.
Street expects TH’s revenue to increase 14.3% year-over-year to $333.13 million in 2022. Its EPS is estimated to grow 300% year-over-year to $0.10 in 2022. Over the past year, the stock has gained 39.3% to close the last trading session at $5.21.
It’s no surprise that TH has an overall B rating, equating to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B for Sentiment and Quality.
TH is ranked #2 in the same industry. In addition, we’ve also rated the stock for Value, Momentum, and Stability. Click here to get all the TH ratings.
Travel + Leisure Co. (TNL)
TNL together with its subsidiaries provide hospitality services and products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership.
On April 28, 2022, Michael D. Brown, TNL’s president and CEO, said, “We continue to see record-setting sales volume per guest from our timeshare business, and we expect occupancy for the remainder of the year to be above 2019 as we anticipate a robust travel season in North America.”
TNL’s net revenues came in at $809 million for the first quarter ended March 31, 2022, up 28.8% year-over-year. Its net income came in at $51 million, up 75.9% year-over-year, while its EPS came in at $0.59, up 78.8% year-over-year. The company’s adjusted EBITDA margin came in at 21%, compared with 20.5% in the previous period.
TNL’s revenue is expected to increase 14.6% year-over-year to $3.59 billion in 2022. Its EPS is expected to grow 25.8% per annum for the next five years. It surpassed EPS estimates in three of the four trailing four quarters. TNL has lost 20.2% over the past month to close the last trading session at $40.62.
TNL's overall B rating equates to a Buy in our POWR Ratings system. It has a B grade for Value and Quality. It is ranked #5 in the same industry. Click here to see the additional POWR Ratings for TNL (Growth, Momentum, Stability, and Sentiment).
BVH shares were trading at $24.37 per share on Wednesday morning, down $0.91 (-3.60%). Year-to-date, BVH has declined -30.18%, versus a -19.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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