Just when it looked like the pandemic was being put in the rearview mirror, the delta variant of the coronavirus surfaced. Worldwide COVID-19 infection rates are growing again, as the older vaccines aimed at a different version of the disease don't quite completely contain it. Then there's the simple fact that a bunch of people have grown weary of limiting their exposure to others, resuming life as it existed before the coronavirus upended the world.
The growing number of COVID-19 cases has put travel and vacation stocks back in the spotlight. For a short while, it looked as if many of these companies would be able to ease back to their pre-pandemic results. Now though, the matter's in question again.
The good news is, if you want to put your finger on the pulse of the vacation and travel market, you can do so by keeping tabs on just three of the industry's names.
Image source: Getty Images.
1. Carnival
The coronavirus pandemic has been challenging for consumers and corporations alike, but perhaps no business has been hit as hard as the maritime cruise industry, and its most-recognized name Carnival (CCL 1.58%), in particular. The company -- its namesake line as well as subsidiaries like AIDA and Princess -- were completely shut down as of the middle of last year, stymied by regulation as much as by consumer worry.
Then in May, the company announced it would finally begin sailing again on a limited basis, gradually reactivating its fleet in the latter half of this year. Just last month, Carnival fleshed out the plan with some numbers, indicating it would be utilizing 65% of corporatewide capacity by the end of the year, with the Carnival brand itself expected to be operating at 75% of its passenger capacity before the end of 2021.
What to watch for: The resumption plan tendered at the time was more plausible than bold, as it reflected the then-shrinking number of COVID-19 cases. The rise of the delta variant, however, puts travel bans back on the radar. Investors may want to keep their eyes and ears open for any changes to Carnival's plans to resume operations, as they could easily be forced to change again -- for the worse.
2. Delta Air Lines
Much like the cruise industry, the pandemic created demand problems for the air travel industry. Delta Air Lines (DAL 2.86%) wasn't immune to this headwind. As of the quarter ending in June, though, the air carrier sees a light at the end of the tunnel. CEO Ed Bastian even went as far as to comment, "Domestic leisure travel is fully recovered to 2019 levels," adding that even the all-important business-travel category was showing signs of slow recovery. Also like Carnival, however, it was an observation vocalized before the delta variant of COVID-19 exploded.
What to watch for: There's nothing that's Delta-specific slated for release in August, but that doesn't mean there won't be plenty of food for thought coming from analysts for the remainder of the month. For instance, Bank of America analysts Stephen Juneau and Michelle Meyer penned in a recent research note that "survey data point to increased concern over being in physical locations because of the virus" just days after Delta shares benefited from several analyst upgrades.
The point being, by virtue of its size and stature, Delta could be the first to be upended by renewed concerns about the health of the air travel business. It would certainly be mentioned as a vulnerable name if air travel demand falters again.
3. Expedia
Finally, add online travel-booking platform Expedia (EXPE -0.16%) to your list of travel names to watch closely this month.
The reasoning is the same as it is with Delta and Carnival. The company touted the fact that the much-improved results for the quarter ending in June were rooted in a recovery that's lingered into the current quarter. But, since the company has had a little more time to weigh the spread of the delta variant, CEO Peter Kern was at least willing to concede that the "recent Covid variant news around the world continues to create uncertainty in the travel industry" within last week's Q2 report.
What to watch for: As was the case with Carnival and Delta, Expedia serves as something of a barometer for the entire vacation and travel business. If there's an overarching problem for the industry linked to the delta variant, that discussion will certainly include this particular travel-booking name.
In some regards, though, there's also much to be gleaned just from watching Expedia stock price move over the course of the next couple of weeks with respect to headlines.
This company was the most recent of the three in question to report last quarter's numbers, and it's not a stretch to suggest Kern and his fellow executives have been a little more candid and forthcoming than the chiefs of other travel-related companies. That candor tanked shares to the tune of 9% the day after last quarter's numbers were released last week, but shares have since stabilized, as investors at least have a clear understanding of what might happen (even if it doesn't end up happening). This should give all observers an idea of whether the market is viewing the proverbial vacation travel glass as half empty or half full.
