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As summer kicks into full gear in the Northern Hemisphere, travel-related companies are facing significant headwinds, including escalating geopolitical tensions, global economic uncertainty, local backlash against overtourism, and changing border policies.
So which cruise, hotel and travel services stocks are best positioned to sail these choppy waters? We asked Seeking Alpha analysts Gary Alexander, Thomas Shields and Harrison Schwartz for their picks.
Gary Alexander: To me, the entire travel sector is going to be underwater with several quarters of poor bookings as consumers pinch their budgets. That said, the best stock in the space right now is Expedia (NASDAQ:EXPE).
Expedia’s (NASDAQ:EXPE) unified One Key rewards program offers cash back rewards for booking, which none of its rivals do – which may be a major enticer in a down economy. Its product redesign, especially of core subsidiary Hotels.com, has significantly improved UI. The stock also trades at below-market valuations that are less than half of Booking Holdings (NASDAQ:BKNG) and Airbnb (NASDAQ:ABNB).
Thomas Shields: From a fundamental basis, the cruise line industry has mostly rebounded from the pandemic lows which significantly impacted the sector. Despite the current macroeconomic pressures, Royal Caribbean Cruises Ltd. (NYSE:RCL) remains the best in the cruise industry, with no indication of a weakening consumer at this time. They continue to outperform in this sector and consistently beat analysts’ expectations each quarter. Additionally, I believe their expansion into river cruises over the next couple of years will further separate them from the crowd and provide an additional avenue of growth.
Carnival Corporation (NYSE:CCL) and Norwegian Cruise Line Holdings (NYSE:NCLH) also look positioned to perform well given that their underlying fundamentals are improving. However, they are not providing as much of an overall return for shareholders as RCL at this point. RCL would be my pick in this industry given their history of beating estimates and guidance to achieve double-digit earnings per share growth and ROIC by 2027.
Harrison Schwartz: Regarding cruise stocks, I’d pick Lindbald (NASDAQ:LIND) due to its reasonable valuation, which is below that of Royal Caribbean (NYSE:RCL) (based on forward “EV/EBITDA”), and its superior revenue growth. The company’s long-term growth potential is strong, driven by its focus on “experience-based tourism,” which aligns with long-term consumer trends.