A record number of Americans are ready to take to the roads, skies, rails and waterways to celebrate Independence Day this year. Such a spike in travel is being backed by rising income levels and higher consumer confidence.
Given the near-term surge in travel demand, investing in leisure and recreational service provider seems judicious. Another investment option is hotels and motels. More travel will lead to increase in hotel occupancy rate and in turn higher revenue per available room.
Jul 4 to See Record Travel
According to the American Automobile Association (AAA), a record number of travelers are projected to travel 50 miles or more during the Independence Day holiday — Jul 3 to Jul 8.
A total of 46.9 million travelers are expected to travel this Independence Day, reflecting an increase of more than 5% from last year. This will mark the highest travel numbers for Independence Day since AAA has started tracking.
Nearly 39.7 million (about 84.7%) travelers, an overwhelming majority, are expected to drive to their destinations, reflecting an increase of 5.1% over last year’s numbers. Gas prices, by the way, have begun to fall since the 2018 high of $2.97 set over the Memorial Day weekend to $2.88 (as of Jun 20). This bodes well for those who are planning a road trip.
Americans are choosing to fly as well. Around 3.8 million (about 8.1%) are set to travel by air, which marks an increase of 7.9% from last year. This will also be the ninth consecutive yearly rise in air travel volumes.
Airlines for America (A4A), the industry trade organization for leading U.S. airlines, foresees 246 million air passengers this summer. This will be an increase of 3.7% from a year ago. The nation’s carriers are adding 116,000 seats per day to accommodate the surge in passengers expected to fly during this period.
Meanwhile, travel by other modes of transport like cruises, trains and buses are expected to jump 5.8% to 3.5 million.
What’s Driving Travel This Independence Day?
Bill Sutherland, senior vice president, AAA Travel and Publishing said that “confident consumers with additional disposable income will look to spend on travel this holiday, building on an already busy summer travel season.”
Disposable personal income increased $63.2 billion or 0.4% in May from the preceding month, while wage growth rose 2.7% on a year-over-year basis. The current unemployment rate, too, is at an 18-year low of 3.8%, while U6 now stands at a level lower than it was during the 2007-2009 recession. The jobless claims are also nearly at the lowest level since the early 1970’s (read more: Jobs Report Paints a Pretty Picture for Stocks: 5 Top Picks).
5 Top Gainers
Cheaper gasoline prices, rise in disposable income and a healthier labor market are prompting more number of people to plan a holiday this Independence Day. Given such factors, travel and leisure stocks are set to break records this summer. We have, thus, selected five such stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Lindblad Expeditions Holdings, Inc. LIND provides expedition cruising and adventure travel services. The stock currently has a Zacks Rank 1. The Zacks Consensus Estimate for its current-year earnings soared 76.9% in the last 60 days. The stock is expected to return 155.7% this year, higher than the Leisure and Recreation Services industry’s estimated return of 17.5%. The stock has outperformed the broader industry in the last three months period (+24.7% vs -0.9%).
RCI Hospitality Holdings, Inc. RICK engages in the hospitality and related businesses in the United States. It operates through two segments, Nightclubs and Bombshells. The stock currently has a Zacks Rank 2. The Zacks Consensus Estimate for its current-year earnings increased 8.5% in the last 60 days. The stock is estimated to return 52.5% this year, higher than the Leisure and Recreation Services industry’s estimated return. The stock has outperformed the broader industry in the last three months period (+14% vs -1%).
Extended Stay America, Inc. STAY owns, operates, and manages hotels in the United States. The stock currently has a Zacks Rank 2. The Zacks Consensus Estimate for its current-year earnings increased 3.6% in the last 90 days. The stock, which is part of the Hotels and Motels industry, is poised to give a steady return of 15% this year. The stock has outperformed the broader industry in the last three months period (+8.9% vs -5.7%). You can see the complete list of today’s Zacks #1 Rank stocks here.
InterContinental Hotels Group PLC IHG owns, manages, franchises, and leases hotels in the Americas and internationally. The stock currently has a Zacks Rank 2. The Zacks Consensus Estimate for its current-year earnings moved up 2.4% in the last 60 days. The stock, under the Hotels and Motels industry, is set to yield a solid return of 22.2% in 2018. The stock has outperformed the broader industry in the last three months period (+2.5% vs -5.7%).
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Playa Hotels & Resorts N.V. PLYA owns, operates, develops, and manages all-inclusive resorts in prime beachfront locations in various vacation destinations. The stock currently has a Zacks Rank 2. The Zacks Consensus Estimate for its current-year earnings surged 50% in the last 60 days. The stock, also part of the Hotels and Motels industry, is likely to give a whopping return of 333.3% in the current quarter. The stock has outperformed the broader industry in the last three months period (+1.3% vs -5.7%).
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