- (0:30) - The Recovery Stocks: Is It Time To Dive In?
- (5:10) - When Can We Expect Travel Industry To Regain Growth?
- (12:20) - How Are The Hotels Performing During The Pandemic?
- (22:30) - Episode Roundup: LUV, DAL, RCL, HLT, HGV, PLYA
Welcome to Episode #236 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to discuss the economic recovery, especially in travel and leisure industries.
They’ve been hit the hardest by the pandemic but with coronavirus cases on the decline again nationwide and some school districts reopening for in-classroom learning, the US economy could be on the cusp of seeing an acceleration in its economic recovery.
Is Travel Back?
Already, the number of travelers at American airports going through TSA screenings has jumped to its highest levels since the week of the lockdowns in mid-March.
And travel by car continues to be popular with hotel and Airbnb stays showing improvement each month during the summer.
But international travel remains a challenge and some consumers remain cautious about taking vacations with coronavirus quarantine restrictions in place.
Is Now the Time to Invest?
Many of the travel and leisure stocks have seen a wild ride since the March coronavirus sell-off.
They’ve had rallies, and then sold off again as the second outbreak in the South picked up steam.
Could these “recovery stocks” be poised for better days ahead once again?
5 Recovery Stocks to Put on Your Watch List
1. Southwest Airlines (LUV - Free Report) is the darling of the domestic traveler and it also flies to Mexico and the Caribbean. More people are getting on planes as we head into the fall. Analysts still expect it to see positive earnings of $1.39 in 2021 even after losing $6.35 this year.
2. Delta Airlines (DAL - Free Report) is a top pick among many investors due to its solid balance sheet and great international routes. But analysts have gotten more pessimistic over the last 3 months about next year as the borders mostly remain closed and business travel is still horrible. The analysts have cut their estimates 2021 estimates over the last 90 days. The Zacks Consensus has fallen to $1.57 from $2.32 during that time.
3. Royal Caribbean (RCL - Free Report) is expected to lose $14.60 a share this year. A few months ago, analysts had hopes that cruises could resume in late summer and pick up momentum into 2021. Three months ago, they were optimistically thinking that Royal Caribbean could make $3.50 a share in 2021. But the estimates have been cut after their earnings report and the Zacks Consensus is now looking for a loss of $5.01. Royal Caribbean is also a Zacks Rank #5 (Strong Sell).
4. Hilton Worldwide (HLT - Free Report) actually still has a forward P/E and is trading at 118x. People have started traveling again and want to go with well-known brands. Analysts still think they’ll see positive earnings in 2020 with the Zacks Consensus looking for $0.71. But 6 estimates have been cut in the past month. Similarly, estimates have been cut for 2021 as well.
5. Hilton Grand Vacations (HGV - Free Report) is a time-share company. Usually they don’t do well during recessions but this is no ordinary recession. There is pent-up demand for travel and time shares are often apartment-like properties where it’s easier to do social distancing. Hilton Grand Vacations also has a forward P/E but it’s at 193x. While it’s expected to lose $0.13 in 2020 analysts see a quick rebound in 2021 to $1.58 per share. It made $2.11 in 2019, so that’s quite the rebound. Will it see a swift recovery?
Government restrictions and future outbreaks and hot spots are sure to put some kinks into these companies’ plans.
But is now the time for traders and investors to be poking around in the recovery stocks?
Tune into this week’s podcast to find out.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>