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U.S. Global Jets ETF (JETS - Free Report) is off 28% this year and is down 12% past month. However, the losing trend might reverse soon. Travel ETFs will surge on optimism that consumers will continue flying this year in the holiday season despite higher fares.
A ‘huge surge in travel’ this holiday season is expected this holiday season, per economists, as quoted on Yahoo Finance. In 2020 and 2021, holiday travelling was under pressure due to heightened fear of COVID-19. Thanksgiving and Christmas are normally two of the most traveled holidays in the fourth quarter.
According to Hopper's 2022 Holiday Travel Outlook released in September, the average price of a domestic plane ticket is $350 for Thanksgiving travel and $463 for Christmas travel. Thanksgiving prices are 22% higher than in 2019 and 43% more than in 2021. Christmas airfares are currently averaging 31% higher than in 2019, and 39% higher than last year.
International airfare is currently averaging $795 per ticket this Thanksgiving, up 25% compared to 2019 and up 41% year over year. Prices for international travel will rise slowly as Thanksgiving comes closure. International airfare has risen to $1,300 per ticket this year, an increase of 26% compared to 2019, and 20% compared to 2018.
A combination of factors like jet fuel prices, fewer flights scheduled and two years of pent-up holiday travel demand will lead this year to drive Thanksgiving and Christmas airfares to their highest in the last five years. Though at least 30% of travelers plan to fly this holiday season, two thirds are looking for affordable prices as they are planning for holiday trips, per Hopper's 2022 Holiday Travel Outlook. These data points make JETS a compelling buy.
Will Fuel Price Decline?
Jet fuel prices, key cost consideration for airline companies, are trending down lately. Prices are down 17.9% year over year, as of Sep 23, 2022, per IATA. However, prices are up 47.2% year over year. If recessionary fears keep doing rounds, oil prices may slump further on possibility of demand woes.
Despite global economic slowdown and recurrent Covid lockdowns in China, global oil demand is forecast to increase by 2 mb/d in 2022 and 2.1 mb/d next year, per IEA’s September report. Jet fuel controls growth, while road transport demand wanes. This means the demand for air travel has been increasing.
What About Earnings Picture?
While the earnings picture is still moderately gloomy, some companies beat on estimates in the latest earnings season. This shows a feeble hope for recovery in the coming days. If there is a steady improvement in the coronavirus scenario globally, one can surely see a jump in this otherwise-undervalued product JETS.
ETF in Focus
The $2.0-billion-fund holds about 30 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees.
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Time for Top-Ranked Airlines ETF (JETS)?
U.S. Global Jets ETF (JETS - Free Report) is off 28% this year and is down 12% past month. However, the losing trend might reverse soon. Travel ETFs will surge on optimism that consumers will continue flying this year in the holiday season despite higher fares.
A ‘huge surge in travel’ this holiday season is expected this holiday season, per economists, as quoted on Yahoo Finance. In 2020 and 2021, holiday travelling was under pressure due to heightened fear of COVID-19. Thanksgiving and Christmas are normally two of the most traveled holidays in the fourth quarter.
According to Hopper's 2022 Holiday Travel Outlook released in September, the average price of a domestic plane ticket is $350 for Thanksgiving travel and $463 for Christmas travel. Thanksgiving prices are 22% higher than in 2019 and 43% more than in 2021. Christmas airfares are currently averaging 31% higher than in 2019, and 39% higher than last year.
International airfare is currently averaging $795 per ticket this Thanksgiving, up 25% compared to 2019 and up 41% year over year. Prices for international travel will rise slowly as Thanksgiving comes closure. International airfare has risen to $1,300 per ticket this year, an increase of 26% compared to 2019, and 20% compared to 2018.
A combination of factors like jet fuel prices, fewer flights scheduled and two years of pent-up holiday travel demand will lead this year to drive Thanksgiving and Christmas airfares to their highest in the last five years. Though at least 30% of travelers plan to fly this holiday season, two thirds are looking for affordable prices as they are planning for holiday trips, per Hopper's 2022 Holiday Travel Outlook. These data points make JETS a compelling buy.
Will Fuel Price Decline?
Jet fuel prices, key cost consideration for airline companies, are trending down lately. Prices are down 17.9% year over year, as of Sep 23, 2022, per IATA. However, prices are up 47.2% year over year. If recessionary fears keep doing rounds, oil prices may slump further on possibility of demand woes.
Despite global economic slowdown and recurrent Covid lockdowns in China, global oil demand is forecast to increase by 2 mb/d in 2022 and 2.1 mb/d next year, per IEA’s September report. Jet fuel controls growth, while road transport demand wanes. This means the demand for air travel has been increasing.
What About Earnings Picture?
While the earnings picture is still moderately gloomy, some companies beat on estimates in the latest earnings season. This shows a feeble hope for recovery in the coming days. If there is a steady improvement in the coronavirus scenario globally, one can surely see a jump in this otherwise-undervalued product JETS.
ETF in Focus
The $2.0-billion-fund holds about 30 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees.