The travel industry has been recovering over the last two quarters after facing a huge decline in sales during the initial months of the COVID-19 pandemic. Because the easing of travel restrictions has begun, total travel spending in the United States is expected to recover 23.2% year-over-year in 2021, following a 45.2% decline last year, according to the U.S. Travel Association. Governments worldwide are now permitting most tourism companies to operate at a 40-50% capacity.
Expanding vaccine eligibility to all people 16 years of age or older, robust monetary savings accumulated during the pandemic and record federal recovery check disbursal are among peoples’ incentives to travel or make advance travel bookings now. Therefore, the global travel & tourism market is expected to generate $539.94 billion revenue in 2021 and grow at a CAGR of 13.9% over the next four years to reach $909.24 million by 2025.
Based on these factors, we expect the tourism industry to gain traction in the near term and regain pre-pandemic levels around the third quarter of 2021. SkyWest, Inc. (SKYW), Bluegreen Vacations Holding Corporation (BVH), and Travelzoo (TZOO) are offering aggressive discounts and travel deals to stay ahead of their peers. So, we think it is wise to invest in these stocks now.
SkyWest, Inc. (SKYW)
Founded in 1972, SKYW operates as a regional airline, providing scheduled passenger and air freight services to various destinations in the United States, Canada, Mexico, and the Caribbean. The company operates through three segments—SkyWest Airlines, ExpressJet and SkyWest Leasing. SKYW’s flights are operated on behalf of Delta Connection, United Express, American Eagle or Alaska Airlines. In addition, it provides airport customer and ground handling services for other airlines.
SKYW won a federal contract to become Sioux Gateway Airport’s new ‘Essential Air Service’ partner and made its first flight from Sioux City to Chicago on April 3, 2021. Also, in late March, the Williston City Commission approved SKYW’s one-year agreement to operate at least one daily round trip flight on a 50-seat CRJ-200 aircraft from Williston Basin International Airport (XWA). Its SkyWest Airlines segment entered a Payroll Support Program Extension Agreement with the U.S. Treasury Department in January affording it a $233 million payment under the Consolidated Appropriations Act of 2021.
For the fourth quarter (ended December 31, 2020), the company’s total operating revenues have increased 28.9% sequentially to $589.64 million. Its operating revenue from flying agreements increased 28.1% sequentially to $569.89 million, and from lease, airport services and other increased 56.7% sequentially to $19.75 million. Its total assets were $6.89 billion as of December 31, 2020, up 3.5% year-over-year. The company’s airlines carried 5.67 million passengers in the fourth quarter, representing a 15.4% increase sequentially.
Analysts expect SKYW’s EPS to improve 52.5% year-over-year for the current quarter, ended March 31, 2021, to $0.90. And its consensus revenue estimate of $636.20 million for the next quarter, ending June 30, 2021, represents an 81.7% rise on a year-over-year basis. The stock has gained 110.3% over the past year and closed yesterday’s trading session at $55.93.
SKYW’s strong fundamentals are reflected in its POWR Ratings. The stock has a B overall rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Quality and Momentum. We have also graded SKYW for Value, Sentiment, Growth, and Stability. Click here to access all SKYW’s ratings.
SKYW is ranked #3 of 29 stocks in the Airlines industry.
Bluegreen Vacations Holding Corporation (BVH)
BVH markets and sells vacation ownership interests (VOI) and manages resorts in popular leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, New Orleans, and others. The company provides resort management, mortgage servicing, title services, construction design, development services, and financing to qualified VOI purchasers, as well as management services to vacation club and homeowners’ associations. BVH also offers a portfolio of fee-based resort management, financial, and sales and marketing services to, or on behalf of, third parties.
This week, BVH announced plans to acquire the approximately 7% remaining of its 93% owned subsidiary, Bluegreen Vacations Corporation’s (BXG) common stock through a statutory short-form merger. Last month, BXG redesigned and enhanced its sales and marketing infrastructure, which includes moving its vacation sales and marketing Headquarters to Knoxville, Tennessee, and changes in the leadership of its sales and marketing efforts.
BVH’s total revenue was $151.23 million for the fourth quarter, ended December 31, 2020, which represents an improvement of 4.8% sequentially. Its gross profit was $11.56 million, compared to a gross loss of $24.80 million in the third quarter of 2020. While its net income from continuing operations was $13 million, representing a nearly 133% rise year-over-year, its net income was $8.90 million, up 63.3% year-over-year. Also, the company’s EPS increased 53.3% year-over-year to $0.46.
A consensus EPS estimate of $0.19 for the next quarter, ending June 30, 2021, represents a 109.7% rise year-over-year. Also, its consensus revenue estimate of $167.10 million for the next quarter represents a 77.2% rise from the prior year period. Analysts expect the stock’s EPS to grow 10% per annum over the next five years. The stock has rallied 163.2% over the past year to close yesterday’s trading session at $20.56.
It’s no surprise that BVH has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and a B grade for Value, Momentum, and Quality. Click here to see the additional POWR Ratings for BVH (Growth and Stability).
BVH is ranked #1 of 19 stocks in the Travel – Hotels/Resorts industry.
Headquartered in New York, TZOO is a media commerce company that provides travel, entertainment, and local deals from various companies and businesses. The company operates through three segments: Asia Pacific, Europe and North America. Its publications and products include Travelzoo Website and mobile apps, Travelzoo Top 20 email newsletter, Newsflash email alert service, Travelzoo Getaways, and Travelzoo Network, a network of third-party Websites that list travel deals published by the company. It serves airlines, hotels, cruise lines, vacation packages, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies.
In March, Gabe Saglie, a TZOO senior editor, announced the company’s new spring break deals in a TV show. TZOO was named the Best Travel Deals Finder at the prestigious British Travel Awards for the ninth consecutive year in December.
The company’s revenue has increased 19.6% year-over-year to $1.56 billion for its fiscal year 2021 first quarter, ended January 30, 2021. Its net income was $727,000, compared to a net loss of $599,000 in the year-ago period. The company had cash and cash equivalents of $64.39 million as of December 31, 2021, which represents an improvement of 210.9% year-over-year. TZOO’s total assets increased 87.8% year-over-year to $102.40 million. Also, TZOO’s EPS came in at $0.06 for the fourth quarter, compared to a loss per share of $0.05 in the prior-year period.
Analysts expect ADI’s EPS for the current quarter, ending April 30, 2021, to be $1.45, up 34.3% year-over-year. Also, for the current quarter, analysts expect ADI’s revenue to be $1.60 billion, representing a 20.9% rise from the prior-year period. The stock’s EPS is expected to grow at 19.8% per annum over the next five years.
The stock has gained 412.6% over the past year and 201.4% over the past nine months to close yesterday’s trading session at $17.48. It has gained 436.2% since hitting its 52-week low of $3.26.
TZOO’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings also evaluate stocks by various components, such as Value, Momentum, and Quality.
The stock has an A grade for Quality, and a B grade for Value, Momentum, and Sentiment. In addition to the POWR Ratings grades we’ve just highlighted, one can see TZOO’s ratings for Growth and Stability here.
TZOO is ranked #1 of 70 stocks in the Internet industry.
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SKYW shares were trading at $54.27 per share on Wednesday afternoon, down $1.66 (-2.97%). Year-to-date, SKYW has gained 34.63%, versus a 9.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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