The global travel and tourism industry was among the worst hit industries amid the COVID-19 pandemic due to the travel restrictions that most countries imposed to contain the virus’ spread. But the industry has been seeing a decent recovery lately thanks to a fast-paced economic recovery and easing travel restrictions facilitated by significant progress on the COVID-19 vaccination front worldwide.
According to the U.S. Travel Association, domestic travel spending is expected to surge 22.5% year-over-year to $787 billion in 2021. The pent-up demand for leisure travel is expected to be the major contributor to this growth.
So, we think it could be wise to bet on fundamentally sound travel and tourism stocks Boyd Gaming Corporation (BYD), Vera Bradley Inc. (VRA), and Full House Resorts Inc. (FLL). They are each trading below their recent highs.
Boyd Gaming Corporation (BYD)
BYD in Las Vegas, Nev., is a multi-jurisdictional gaming corporation that operates through three business segments; Las Vegas Locals; Downtown Las Vegas; and Midwest & South. The company operated 28 casino entertainment venues in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania as of March 8, 2021. In addition, it also owns and operates a travel agency.
Last month, BYD and Hawaiian Airlines agreed to a new strategic collaboration that will allow members of BYD’s award-winning B Connected player loyalty program and the carrier’s renowned HawaiianMiles program to earn even more benefits and rewards. Through this partnership, customers will have access to the company’s exciting reward tiers, exclusive player benefits, and memorable entertainment experiences.
During the first quarter, ended March 31, 2021, BYD’s revenue increased 10.7% year-over-year to $753.31 million. The company reported $193.74 million in operating income, versus a $137.76 million operating loss in the prior year. Its net income came in at $102.16 million for this period, compared to a $147.56 million net loss f in the first quarter of 2020. The company’s EPS came in at $0.9, compared to a $1.30 loss per share in the prior year period.
A $3.29 consensus EPS estimate for the current year represents a significant improvement year-over-year. Furthermore, BYD has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. The $3.09 billion consensus revenue estimate for the current year represents a 41.7% increase from the same period last year. The stock has gained 173.2% over the past year to close yesterday’s trading session at $55.25. It is currently trading 22.2% below its 52-week high of $71, which it hit on April 28, 2021.
BYD’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BYD is also rated an A for Growth, and a B for Quality and Sentiment. Within the Entertainment – Casinos/Gambling industry, it is ranked #1 of 30 stocks. To see additional POWR Ratings for Momentum, Stability, and Value for BYD, click here.
Note that BYD is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Vera Bradley, Inc. (VRA)
VRA designs, manufactures and sells women’s handbags, accessories, luggage, travel items, eyewear, and gifts. The company offers bags, travel-related accessories, backpacks, and home products, among others. It operates through three segments, Vera Bradley Direct, Vera Bradley Indirect, and Pura Vida. VRA operated 75 full-line stores and 69 factory outlet outlets as of March 10, 2021. VRA is based in Roanoke, Ind.
Last month, VRA, in collaboration with Classic accessories, launched a co-branded outdoor living collection. The launch should give customers access to the products of both the companies and help VRA boost its revenue.
During its fiscal first quarter, ended May 2, 2021, VRA’s revenue for the direct segment increased 81.2% year-over-year to $66.7 million. The company’s indirect segment revenue increased 35.9% year-over-year to $15.3 million, while its gross profit grew 73.1% from the prior-year quarter to $59.16 million.
VRA is expected to generate 21.8% revenue growth for the current year. Its EPS is estimated to increase 50.8% year-over-year to $0.95 in its fiscal year 2022. The stock has soared 176.9% over the past year to close yesterday’s trading session at $11.63. It is currently trading 14.6% below its 52-week high of $13.62, which it hit on June 8, 2021.
VRA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Value, and a B for Momentum and Quality. In the A-rated Fashion & Luxury industry, it is ranked #8 of 66 stocks.
In total, we rate VRA on eight different levels. Beyond what we’ve stated above, we have also given VRA grades for Growth, Stability, and Sentiment. Get all the VRA ratings here.
Full House Resorts Inc. (FLL)
FLL, in Las Vegas, Nev., is a hospitality and entertainment company that owns, leases, develops, manages, and invests in casinos, and related hospitality facilities in the United States. It operates various hotels and casinos in locations that include Mississippi, Colorado, Nevada and others.
FLL’s revenue increased 36.8% year-over-year to $42.21 million in the first quarter, ended March 31, 2021. The company reported $8.69 million in operating income, compared to a $3.43 million operating loss in the prior year period. Its cash and cash equivalents surged year-over-year to $277.93 million.
The company’s EPS is expected to grow 700% year-over-year to $0.08 in the current year. Analysts expect FLL’s revenue to increase 41.4% to $177.64 million in its fiscal year 2021. The stock has surged 562.3% over the past year to close yesterday’s trading session at $8.61. It is currently trading 27.8% below its 52-week high of $11.92, which it hit on May 28, 2021.
It is no surprise that FLL has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Growth, and a B for Value and Momentum. In the Entertainment – Casinos/Gambling industry, it is ranked #3 of 30 stocks.
In addition to the POWR Ratings grades we have just highlighted, you can see the FLL rating for Stability, Quality, and Sentiment here.
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BYD shares were trading at $54.56 per share on Thursday morning, down $0.69 (-1.25%). Year-to-date, BYD has gained 27.12%, versus a 17.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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