Travel expenses have increased amid record-high inflation. However, pent-up travel demand in the post-pandemic era helped the industry to rebound. U.S. Transportation Secretary Pete Buttigieg said, “We are delighted that (travel) demand is returning.”
Moreover, the passenger count soared during the 2022 Thanksgiving holidays. The U.S. Transportation Security Administration screened 2.56 million air passengers on November 27, 2022, the highest number since December 2019.
This momentum is expected to stretch into Christmas and New Year. According to the Hotel Booking Index Survey from the American Hotel & Lodging Association, around 28% of Christmas travelers are expected to stay in a hotel during their trip, up from 23% last year.
Given the backdrop, quality travel stock Bluegreen Vacations Holding Corporation (BVH) could make for an ideal buy ahead of the holiday season. However, fundamentally weak Carnival Corporation & plc (CCL) might be best avoided.
Stock to Buy:
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It markets and sells vacation ownership interests (VOI) and manages resorts in leisure and urban destinations.
On November 3, 2022, Alan B. Levan, BVH’s Chairman and CEO, said, “Overall, the demand for vacations by Bluegreen Vacation Club owners has been strong and we believe our core strategy of primarily offering a ‘drive-to’ network of resorts will continue to serve as a growth driver.”
For the third quarter that ended September 30, 2022, BVH’s total revenues came in at $250.84 million, up 16.9% year-over-year. Its interest income came in at $25.80 million, up 23.3% year-over-year. Moreover, its EPS came in at $1.19, up 12.3% year-over-year.
Analysts expect BVH’s revenue to increase 17.5% year-over-year to $889.61 million in 2022. Its EPS is expected to increase 20.8% year-over-year to $3.37 in 2022. Over the past month, the stock has gained 23% to close the last trading session at $21.63.
BVH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BVH has an A grade for Value and a B for Sentiment and Quality. It is ranked #2 out of 21 stocks in the B-rated Travel – Hotels/Resorts industry. Click here for the additional POWR Ratings for Growth, Momentum, and Stability for BVH.
Stock to Avoid:
Carnival Corporation & plc (CCL)
CCL operates as a leisure travel company. Its ships visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (U.K.), and Cunard brand names.
CCL’s forward E.V./Sales of 3.25x is 192.5% higher than the industry average of 1.11x. Its forward Price/Sales of 0.95x is 11.2% higher than the industry average of 0.85x.
CCL’s cash and cash equivalents came in at $7.07 billion for the period ended August 31, 2022, compared to $8.94 billion for the period ended November 30, 2021. Its total current assets came in at $8.43 billion, compared to $10.13 billion for the same period, while its total current liabilities came in at $12.95 billion, compared to $10.41 billion.
CCL’s EPS is expected to decline 151.4% per annum for the next five years. It missed EPS estimates in all four trailing quarters. The stock has lost 53.4% year-to-date to close the last trading session at $9.32.
CCL’s POWR Ratings reflect its poor prospects. The stock has an overall D rating, equating to a Sell. It has an F grade for Stability and a D for Value, Sentiment, and Quality.
Click here to access the additional POWR Ratings for CCL (Growth and Momentum). CCL is ranked #2 out of 4 stocks in the F-rated Travel – Cruises industry.
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BVH shares were unchanged in premarket trading Tuesday. Year-to-date, BVH has declined -37.19%, versus a -15.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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