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2 Top Travel Stock Ideas for the Reopening of America

By Rick Munarriz - May 4, 2021 at 11:45AM

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Not every travel stock is going to benefit the same this summer.

This summer is shaping up to be everything the travel industry needs right now. Between improving U.S. vaccination rates, a rapidly recovering economy, and pent-up demand for travel after a lost 2020, it's time to start putting some of your investing dollars into the reopening of the country in 2021.

We're not out of the woods just yet, but it certainly seems as if Airbnb (ABNB 2.62%) and Camping World Holdings (CWH 1.48%) are positioned perfectly in the turnaround. Let's see why these two stocks have wheels.

A couple in a home with cash under the sofa.

Image source: Getty Images.

1. Airbnb

The travel industry's widely expected recovery finds investors scrambling to get back into airlines, hotel chains, and rental car agencies, but some of those moves may be premature. Consumer recreational travel may be back, but the same can't be said about corporate travel, which also accounts for a good chunk of airplane seats, overnight stays, and vehicle rentals. 

There's also the fear that folks may be hesitant to board crowded planes or share hotels with hundreds of other families. The road trip is going to be a big thing this year -- sorry, auto rental industry -- and the big winner at the desired destination is going to be Airbnb. 

Airbnb offers families and friends the ability to rent out guest rooms or even entire homes all over the world. The platform was rolling before the pandemic. Revenue soared 43% in 2018, climbing a respectable 32% in 2019. Last year was a global dud, of course, but the nearly 30% decline in revenue was great compared to the drop of 50% to 70% in revenue that hotel managers suffered in 2020. 

Airbnb will continue to be a leader during the initial reopening phase. It already impressed the market earlier this year with its first quarterly report since going public late last year, generating top-line results that were far better than expected. Consumers will continue flocking to Airbnb as a safer alternative to hotels this summer, and investors will follow suit.

A woman in an RV looking out a window and mountains.

Image source: Getty Images.

2. Camping World

If Tuesday morning's quarterly report beat took the market by surprise, it's only because it hasn't been paying attention. The country's leading retailer of motorhomes and recreational vehicle towables has been rolling past expectations with ease for a while now. 

Quarter EPS (est.) EPS (actual) Surprise
Q1 2020 ($0.08) ($0.03) 63%
Q2 2020 $0.65 $1.62 149%
Q3 2020 $1.02 $1.58 55%
Q4 2020 $0.26 $0.48 85%
Q1 2021 $0.69 $1.40 103%

Source: Yahoo! Finance.

Revenue soared 52% to hit $1.56 billion, nearly double the 27% increase that Wall Street pros were targeting. The news gets even better on the bottom line, as the $1.40 a share it posted in earnings more than doubled what the market was expecting. Camping World has landed ahead of analyst profit forecasts by 55% or better in each of the past five quarters. 

It's easy to see why folks are hopping on the RV trend. A home on wheels is the safest means of travel in the new normal for those who can afford a motorhome or towable. The insane part of this story is how cheap the stock is for an investment that has been a 13-bagger since bottoming out 14 months ago.

Camping World posted an adjusted profit of $3.66 a share last year. Tuesday's profit is pitted against an adjusted deficit of $0.03 a share a year earlier, so the trailing adjusted income clocks in at roughly $5.09 a share. Camping World is a 13-bagger with accelerating fundamentals that just happens to be trading for less than nine times trailing earnings. It also boosted its adjusted EBITDA guidance for all of 2021 this week. 

Don't be tricked into assuming that all travel and tourism stocks are the same. Airbnb and Camping World are first-class stocks in an industry that will be lucky to be flying coach this summer.

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Stocks Mentioned

Camping World Holdings, Inc. Stock Quote
Camping World Holdings, Inc.
$21.91 (1.48%) $0.32
Airbnb, Inc. Stock Quote
Airbnb, Inc.
$91.41 (2.62%) $2.33

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