3 Stocks to Hold for the Next 20 Years
They've positioned themselves for success now and down the road.
It's easy to be bullish on travel and tourism stocks, especially with countries successfully rolling out COVID-19 vaccines and easing travel restrictions. Who couldn't use a vacation about now?
U.S. travel spending dropped by 42% year-over-year in 2020, while historically it has grown between 2% and 4% annually, according to the U.S. Travel Association. International travel was hit even harder, falling year-over-year by 76%. It's safe to say the pent-up demand is significant among people who are eager to travel again.
Travel and tourism is a broad category, with a diverse list of well-known brands. For those planning to invest money in travel companies, you have plenty of options to choose from.
Since travel and tourism companies vary so much in terms of their offerings, it's hard to nail down a single key metric to watch. For example, some travel companies are asset-heavy businesses, while others are essentially tech companies.
The best travel and tourism companies do share a couple of traits, namely strong brand recognition and a loyal following. Here are some of the top travel and tourism companies:
Booking Holdings (NASDAQ: BKNG) is one of the largest online travel portals. It's the parent company of several popular travel booking sites, including:
While this business suffered during the pandemic, Booking slashed about 25% of its global workforce to save upwards of $300 million annually. It came out of the ordeal with billions in cash on its balance sheet available to steady the company during down times.
Few companies have the ability Booking does to provide vacationers with planning and comparison tools. This travel company's global reach should serve it well in the years to come.
Southwest Airlines (NYSE: LUV) endured the pandemic better than most airline stocks. It was the first major airline to bounce back and post a quarterly profit, and it is well-positioned to benefit now that air travel is returning to pre-pandemic levels.
The airline has been around for half a century now, but it istill has the reputation of being an outsider disrupting the industry. An innovative operating philosophy enables Southwest to keep its costs lower than most of its rivals.
Southwest also has the best balance sheet in the airline industry, and it is one of the few airlines that has never fallen into bankruptcy. When demand wanes, its streamlined nature allows it to reduce expenses effectively.
Marriott International (NASDAQ: MAR) is one of the world's largest hotel companies, with more than 7,000 properties spread across more than 130 countries. It's a holding company for 30 brands, including:
The company has an asset-light business model. It earns fees for licensing its brands and managing properties but doesn't incur the expenses of property ownership. Marriott's extensive geographic reach, world-class brands, and global loyalty programs make it a long-term winner.
Airbnb (NASDAQ: ABNB) allows homeowners to list properties directly and has amassed a vast number of listings across the globe. Many of them are in less-traveled neighborhoods and unique locations that hotel chains can't match.
Because of the pandemic, Airbnb in 2020 experienced a 41% decline in bookings and a 30% reduction in revenue, but, in the first quarter of 2021, it increased its revenue by 6% over 2019. The company recently upgraded its platform by adding flexible-date search tools and making the process to become a host faster and easier. Before the pandemic, Airbnb enjoyed years of explosive growth, and it is likely to enjoy a strong recovery after it.
The Walt Disney Company's (NYSE: DIS) theme parks and hotels are some of the world's premier vacation destinations. Disney cruise ships are also popular and offer family-themed voyages that are set to resume this year.
While many travel companies are totally reliant on travel demand to generate income, Disney is more resilient. In addition to travel, the company makes money from television, movies, streaming content, and merchandise. These numerous revenue streams are part of the reason why many investors consider Disney one of the most undervalued stocks for 2021.
If you're bullish on travel and tourism but would rather not invest in individual companies, then buying shares in an exchange-traded fund (ETF) may be a better option. Travel-focused ETFs invest in large numbers of travel and tourism companies and confer instant diversification within the sector.
Two travel ETFs to consider:
Your travel-related investments are no longer confined to terrestrial Earth. Many companies are exploring space, with those that are publicly traded including Virgin Galactic Holdings (NYSE: SPCE). Richard Branson's company is planning to begin offering commercial flights into space -- for $250,000 per person -- in 2022.
Another option is the Procure Space ETF (NYSEMKT: UFO). This ETF invests in a variety of companies that are catering to Virgin Galactic and its competitors as they work to take flight.
Ecotourism is a fast-growing niche, especially among young travelers. The objective of ecotourism is to learn about and support conservation efforts in exotic and often threatened natural environments and to visit those places without causing any further ecological damage.
Specialized tours, lodging in remote locales, and flying in an ecofriendly manner are all forms of ecotourism. While most ecotourism companies are not publicly traded, JetBlue Airways (NASDAQ: JBLU) stands out for its commitment to achieving net-zero carbon emissions by 2040. The discount airline has also established partnerships with multiple environmental organizations, including The Nature Conservancy and The Ocean Foundation. Investors interested in ecotourism should look for eco credentials when evaluating travel and tourism stocks.
Travel companies are often niche, enabling you to invest in a variety of travel and tourism stocks that cater to your particular interests and investment priorities.
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