What makes travel stocks cyclical?

Travel stocks are considered cyclical because their performance tends to follow economic cycles. When the economy is strong and consumer confidence is high, people have more disposable income to spend on leisure travel. Conversely, during economic downturns, travel is often one of the first discretionary expenses that consumers cut back on. This makes travel companies more sensitive to economic conditions compared to businesses selling essential goods and services.

How does remote work affect travel company stocks?

Remote work is changing travel patterns in ways that benefit many companies in this portfolio. With location flexibility, people can take longer trips (sometimes called "workations" or "bleisure" trips), travel during off-peak times, and visit destinations they might not otherwise consider for a standard vacation. This trend is creating more consistent demand throughout the year rather than concentrated during traditional vacation periods, potentially reducing seasonality issues for travel companies.

What are the different segments within the travel industry?

The travel industry consists of several key segments represented in this portfolio: online travel agencies (like BKNG and EXPE) that facilitate bookings, transportation providers (airlines like DAL and AAL, and cruise lines like CUK and LIND), accommodation companies (hotel chains like MAR and timeshare operators like HGV), destination experience providers (like MTN for ski resorts), and specialized services (like TRVG for price comparison or GBTG for business travel). Each segment plays a different role in the travel ecosystem and may respond differently to market conditions.

What is a dividend yield and why does it matter for travel stocks?

Dividend yield is the annual dividend payment expressed as a percentage of the current stock price. It shows how much a company pays out in dividends relative to its share price. For travel stocks, dividend yields can vary significantly. Some established companies like major airlines or hotel chains might offer dividends, providing income to investors even during slower travel periods. However, many travel companies, especially growth-oriented ones, reinvest profits into expansion rather than paying dividends. When evaluating travel stocks, dividend yield is just one factor to consider alongside growth potential.

How do projected sales and profit figures help evaluate travel stocks?

Projected sales and profit figures give you insight into analysts' expectations for a company's future performance. For travel companies, these projections often reflect anticipated travel volume, pricing power, and operational efficiency. Strong projected growth might indicate that analysts believe a company will benefit from industry trends like increased travel demand or market share gains. However, it's important to understand what's driving these projections—whether it's overall market growth, competitive advantages, or other factors—and to recognize that projections are estimates that can change as conditions evolve.

16 handpicked stocks

Wanderlust Economy

Explore investment opportunities in companies powering global travel experiences. These carefully selected stocks represent the full journey ecosystem, from booking platforms to airlines, cruise lines, and hospitality. Travel industry innovators poised for growth as exploration rebounds worldwide.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17