Independence Day travel weekend is poised to be the busiest for holidaymakers since 2007. According to the American Automobile Association (AAA), around 41.9 million travelers are projected to travel 50 miles or more during the weekend.
Cheaper gasoline prices, an upbeat labor market and a rise in consumer confidence are prompting more number of people to plan a holiday getaway this weekend. The Independence Day weekend is usually the busiest summer holiday travel period.
Fourth of July Weekend Travel to Rise
Independence Day Weekend travel is anticipated to increase 0.7% from 41.6 million people who traveled last year. Additionally, estimates for travelers during the Independence Day weekend is 13% higher compared to the forecasted Memorial Day weekend travelers. (Read: Memorial Day Weekend Travel to Hit 10-Yr High: 3 Choices)
Almost 85% or 35.5 million travelers are expected to drive, an increase of 0.7% over last year’s Independence Day weekend. This would also be the highest since 2000. Travelers, in general, are already driving more. According to the Federal Highway Administration, travelers drove 987.8 billion miles for the first four months of 2015, topping 2007’s record of 965.5 billion.
Air travel is expected to account for 7.7% of all Independence Day holiday travel. About 3.21 million leisure travelers will take to the sky, which is 1.5% higher than year ago level. Additionally, a record number of travelers are expected to fly this summer season surpassing the pre-recession high in 2007, according to Airlines for America. (Read: Airlines Expect Busiest Summer Ever: 2 Stock Picks)
Meanwhile, travel by other modes of transport including cruises, trains and buses are expected to increase 0.5% to 3.2 million this Independence Day holiday. However, travelers will have to bear moderately higher lodging costs this Independence Day.
According to AAA’s Leisure Travel Index, average stay in a Three Diamond hotel will cost 9% higher this year at $195, while the cost of a Two Diamond hotel will be 6% higher this year at $145. Additionally, airfares for the top 40 domestic flights may also rise 6% to $227 this year.
Nevertheless, cheap gasoline prices and rise in wages are expected to boost disposable income, which will eventually spur an uptick in Independence Day travel. Disposable income is slated to increase by 3.8% from last year.
Cheapest Gasoline Price in 5 Years
Most drivers are likely to pay the lowest Independence Day gas prices in last five years. The nation’s average gas price for this year is $2.78, 88 cents less than the average gas price for Independence Day 2014. The drop in gasoline prices has resulted in savings of $65 billion this year, an average $530 for American households.
Drop in oil prices have dragged U.S. gasoline prices to such low levels. A stronger U.S dollar and abundant supply of oil are expected to curb further rise in oil prices. Moreover, uncertainty about Greece’s financial stability might adversely impact financial markets thereby reducing global energy demand, resulting in further decline in prices.
Crude oil prices are hovering around the $60 per barrel range since mid-April. Excluding turmoil in Middle East, strong Atlantic hurricanes and sudden increase in demand, oil prices are expected to fall further this year.
Upbeat Jobs Market
Improving employment market is fueling vacation planning this holiday weekend. The average hourly earnings gained 0.3% in May from previous month’s figure to $24.96 per hour. The average hourly earnings witnessed a 2.3% rise from the year-ago figure, the highest rate since Aug 2013. The US economy also recorded the largest job additions in May since Dec 2014. A total of 280,000 jobs were created in May.
Meanwhile, private sector hiring increased at the fastest pace in six months in June. According to the Automatic Data Processing, Inc. ADP a total number of 237,000 private jobs were added last month, higher than the upwardly revised May’s jobs additions to 203,000. The numbers were higher than market expectations too, as economists were eyeing an addition of 220,000 jobs.
An upbeat jobs report indicated the economy was on a solid footing. Further, the Consumer Confidence Index, a key determinant of the economy’s health advanced to 101.4 in June from 94.6 in May. (Read: US Consumer Confidence Up Despite Greek Crisis: 3 Picks)
3 Choices
Given these encouraging factors, it is expected that consumer spending levels will increase and a higher number of people spend their money on travel.Personal consumption expenditure has already recorded its biggest jump in May since Aug 2009.
Below we present three stocks that have a good Zacks Rank. Further, thanks to our new style score system we have been able to identify growth stocks which have incredible potential in the near term.
Marriott Vacations Worldwide Corp. VAC is a developer, seller and manager of vacation ownership resorts under the Marriott and Ritz-Carlton brands and trademarks.
This Zacks Rank #1 (Strong Buy) company has a Growth Style Score of ‘B.’ The company has expected earnings growth of 18.3% for the current year. The stock’s earnings estimates for the current year were revised 1.5% upward over the last 60 days. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 26.47.
Carnival Corporation CCL offers a broad range of cruise services and is one of the world’s largest multiple-night cruise companies.
This Zacks Rank #2 (Buy) company has a Growth Style Score of ‘B.’ The company has expected earnings growth of 27.5% for the current year. The stock’s earnings estimates for the current year were revised 1.6% upward over the last two months. It has a P/E (F1) of 19.76x.
SkyWest Inc. SKYW through its subsidiaries operates one of the larger regional airlines in the United States.
This Zacks Rank #1 (Strong Buy) company has a Growth Style Score of ‘B.’ The company has significantly high expected earnings growth for the current year. The stock’s earnings estimates for the current year were revised 32.9% upward over the last 60 days. It has a P/E (F1) of 11.68x.
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