Vacation-Bound: 3 Travel Stocks Set to Surge This Summer

According to Travel + Leisure magazine, the “Demand for premium travel continues at a torrid pace in 2024.” Indeed, most respondents to a poll conducted in seven countries, including America, Mexico and the UK, reported that they are planning huge trips this year.

Conducted by American Express (NYSE:AXP), the survey also found that 84% of the respondents intend “to spend more or the same amount of money on travel in 2024” as they did last year. Moreover, international travel remains very popular.

Another big trend is traveling to attend sporting events in cities like Paris, where the Olympics will be held and New York City, where, as usual, the U.S. Open tennis tournament will occur. On the other hand, the cost of traveling is reportedly surging. Still, amid the strong economy in the U.S. and many other nations, that shouldn’t be too much of an obstacle. Here are three top travel stocks that are well-positioned to rally this summer.

Delta Air Lines (DAL)

Delta Air Lines (NYSE:DAL) reported strong first-quarter results and provided solid full-year guidance, while its valuation remains very low. And since Delta offers many overseas flights, it’s well-positioned to benefit from the continued strong overseas travel trends that I mentioned in the introduction.

The airline’s Q1 operating income came in at $614 million versus an operating loss of $277 million during the same period a year earlier. Moreover, its operating revenue jumped 8% year-over-year to $13.75 billion and its operating cash flow also advanced an impressive 8% year over year to an impressive $2.4 billion.

For the full year, DAL expects to generate earnings per share of $6 to $7. Based on the midpoint of the guidance range, its forward price-earnings ratio is 7.4 times, which is quite low and attractive.

MakeMyTrip (MMYT)

Source: Shutterstock

MakeMyTrip (NASDAQ:MMYT) is India’s leading online travel agency. In other words, it’s the Asian country’s version of Booking.com (NASDAQ:BKNG). Indeed, MMYT has a huge 54% share of the Indian OTA market, The Hindu Business Line reported last year, according to Seeking Alpha columnist The Value Pendulum.

As I’ve noted previously, the Indian economy is quite strong, as the country’s GDP is expected by the International Monetary Fund (IMF) to expand by a large 6.8% this year. Moreover, the company will benefit from the rapid growth of the country’s middle class. Further, with over 60% of the country’s travel still being booked offline, MMYT is likely to grow tremendously in tandem with the nation’s online travel sector.

Analysts, on average, expect its earnings per share to jump to 87 cents this year and $1.32 in 2025, versus a per share loss of 8 cents in 2023.

Hilton Worldwide Holdings (HLT)

Source: josefkubes / Shutterstock.com

Like Delta, Hilton Worldwide Holdings (NYSE:HLT) recently reported very strong results. That indicates it is benefiting a great deal from the continued, powerful travel trends.

Specifically, its top line jumped 12% versus the same period a year earlier to $2.57 billion. Revenue per available room (RevPAR), excluding currency fluctuations, climbed 2% year-over-year. Also importantly, its earnings per share advanced to $1.53 from $1.24. Analysts, on average, were expecting its EPS to come in at $1.42, so it easily beat the mean estimate.

For all of 2024, Hilton expects its comparable revenue per available room to rise another 2% to 4%. The firm believes its revenue per available room growth is likely to accelerate this year versus Q4 of 2023. Analysts, on average, expect its EPS to jump to $7.10 this year from $6.21 in 2023.

Bill Ackman’s company, Pershing Square, called HLT “a high-quality, asset-light, high-margin business with significant long-term growth potential.” Pershing added that the lodging sector’s “near-term industry trends remain favorable.”

On the date of publication, Larry Ramer’s wife held a long position in AXP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.