Rise in Summer Vacations Makes Travel Stocks Enticing, but Is the Sector Strong Enough for Investing?
There are indicators everywhere, from packed airports to busy hotels, pointing to tremendous growth in the travel sector as we head into Summer 2022. In addition, the April jobs report showed 78,000 new jobs in the leisure and hospitality sector.
Although this total still sits 8.5% below pre-pandemic numbers in February 2020, the market is growing. But does that mean you should invest some of your money into travel stocks?
Travel companies like Trivago, Marriott, Airbnb and others would like you to think so. Trivago CEO Axel Hefer told CNN, “Sentiment is getting better and better. This year will be a lot more normal than last year.”
Marriott International — owner of Marriott, Sheraton, Ritz-Carlton and other hotel chains across the world — predicted that revenue would reach pre-pandemic levels in the U.S. and Canada for the remainder of 2022, CNN reported.
However, uncertainty remains in the second half of the year. First, the threat of a fresh surge of COVID infections could occur when temperatures drop in the fall and winter, especially if a new variant emerges.
Also, the continued inflation rates we’re experiencing in the U.S. could cause people to cut back on summer travel — or at least spend more conservatively on their planned trips. On the flip side, companies like Trivago and Expedia, which help people save money on their travel bookings, could do well in this environment.
InvestorPlace.com recommended Expedia as one travel stock currently experiencing a dip that is possibly worth a look. As of the morning of May 10, it’s hovering near its 52-week low at $127.79 and down nearly 25% in the past five days.
Lyft and Airbnb are others, currently trading at $18.61 and $119.37, respectively, just slightly above their 52-week lows.
If you want to invest in the travel sector, InvestorPlace.com recommended looking for stocks like these, which are undervalued due to “highly emotional” investor reactions. If the travel market continues to rise, these stocks have the most ground to gain.
Whether you’re investing for short-term gains or buy-and-hold, always make sure to evaluate the company’s fundamentals beyond the market trends, and never invest more than you’re willing to lose.
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