This Memorial Day is expected to be the busiest travel day in two years, with more than 39 million people expected to travel this Memorial Day weekend, marking an increase of about 8% from the last year. The unofficial start to the summer is expected to see travel volumes almost in line with pre-pandemic levels. “Based on our projections, summer travel is not just heating up, it will be on fire. People are overdue for a vacation, and they are looking to catch up on some much-needed R&R in the coming months,” said Paula Twidale, senior vice president of AAA Travel. This bodes well for the travel industry.
Also, according to the World Travel & Tourism Council (WTTC), the U.S. Travel industry could top pre-pandemic levels in 2022, accounting for nearly $1.50 trillion in the U.S. GDP. And the global Luxury Travel market is expected to reach $10.90 billion by 2026, growing at an 8.4% CAGR.
Given this travel season’s robust prospects, we think it could be wise to bet on the stocks of popular companies InterContinental Hotels Group PLC (IHG), Expedia Group, Inc. (EXPE), and Murphy USA Inc. (MUSA).
InterContinental Hotels Group PLC (IHG)
IHG is a global hospitality company that owns, manages, leases, and franchises hotels. It operates through three segments: The Americas; Europe, Middle East Asia and Africa (EMEAA); and Greater China. As of Dec. 31, 2021, the Denham, U.K.-based company operated 5,991 hotels and 880,327 rooms in approximately 100 countries.
On May 18, IHG announced its brand debut in Crete as it develops ‘InterContinental Resort Crete’ in partnership with Henderson Park, the private equity real estate firm, and Hines, the international real estate firm. With such introductions, the company continues to grow in Europe.
On March 30, IHG partnered with Sunview Companies to open the first Atwell Suites property with 90 rooms in Miami. This launch should enable IHG to meet the growing demand and boost its revenues in the coming years.
IHG’s RevPAR increased 61% year-over-year for the first quarter ended March 31, 2022, while its average daily rate was 27% up from its year-ago value over the period. The company signed 17,000 rooms into its development pipeline during the first quarter, up 15% year-over-year. Also, it reported gross system size growth of 4.9% year-over-year and net system size growth of 3.4% year-over-year.
Analysts expect IHG’s EPS and revenue to increase 74.4% and 31.2%, respectively, year-over-year to $2.56 and $1.82 billion in its fiscal 2022 (ending Dec. 31, 2022).
IHG stock has gained marginally over the past five days to close yesterday’s trading session at $60.60.
IHG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. IHG also has an A grade for Growth and a B grade for Sentiment. The stock is ranked #2 of 22 stocks in the Travel - Hotels/Resorts industry.
Click here to see the other ratings of IHG for Value, Momentum, Stability, and Quality.
Expedia Group, Inc. (EXPE)
EXPE in Seattle, Wash., is an online travel company operating through three segments: Retail; B2B; and Trivago. The company offers travel products and services, a loyalty program, hotel accommodation, advertising, and media services under five brands: Brand Expedia, Hotels.com, Vrbo, Expedia Partner Solutions, and Egencia.
On May 4, EXPE unveiled a new technology platform, marketplace, and traveler benefits called ‘Expedia Group Open World.’ The platform is driven by artificial intelligence and machine learning capabilities to enable new and existing partners to thrive in the travel market with a suite of solutions tailored to their needs.
On February 28, EXPE formed a partnership with IHG for optimized distribution. With this partnership, IHG should leverage EXPE’s Optimized Distribution program for consolidating and simplifying its wholesale distribution. “We’re here to build great products and facilitate connections between travelers and our partners by using the power of our platform. That is why we are so pleased to have IHG join the success of the Optimised Distribution program,” said Ariane Gorin, President, Expedia for Business, Expedia Group.
EXPE’s revenue increased 81% year-over-year to $2.25 billion in the first quarter (ended March 31, 2022). Its gross bookings rose 58% from its year-ago value to $24.41 billion, while its adjusted EBITDA increased 398.3% year-over-year to $173 million.
For its fiscal third quarter (ending Sept.30, 2022), EXPE’s revenue is expected to increase 24.6% year-over-year to $3.69 billion. Its EPS is expected to grow 19.8% year-over-year to $4.23 in the next quarter. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 5.9% intraday to close the last trading session at $123.73.
EXPE’s POWR Ratings reflect solid prospects. The stock has an overall B rating, which translates to Buy in our proprietary rating system. It has an A grade for Quality and a B grade for Growth and Value. The stock is ranked #4 of 70 stocks in the Internet industry.
Click here to see the other ratings of EXPE for Sentiment, Momentum, and Stability.
Note that EXPE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Murphy USA Inc. (MUSA)
MUSA in El Dorado, Ark., markets retail motor fuel products and merchandise through a chain of retail stores. The company operates retail stores under three brands: Murphy USA, Murphy Express, and QuickChek. It has 1,679 retail stores located in approximately 27 states, primarily in the Southeast, Southwest, and Midwest United States.
On May 5, MUSA’s board of directors declared a 7% increase in the company’s quarterly cash dividend to $0.31 per share of common stock, payable on June 1, 2022. This reflects the company’s improved performance.
MUSA’s net revenue increased 44.7% year-over-year to $5.12 billion in the first quarter, ended March 31, 2022. The company’s operating income increased 133.3% from its year-ago value to $220.70 million, while its net income came at $152.40 million representing a 175.6% improvement year-over-year. MUSA’s EPS has risen 202.5% from the prior-year quarter to $6.08.
Analysts expect MUSA’s revenue for its fiscal year 2022 (ending Dec. 31, 2022) to come in at $22.28 billion, representing 28.4% year-over-year growth. The Street expects the company’s EPS to increase 17.1% year-over-year to $17.86 in the current year. It has surpassed the consensus EPS estimates in each of the trailing four quarters.
The shares of MUSA have gained 82.7% in price over the past year to close yesterday’s trading session at $244.66.
MUSA’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. It also has a B grade for Value and Quality. Also, it is ranked #4 of 44 stocks in the Specialty Retailers industry.
In addition to the POWR Ratings grades I have just highlighted, you can see the MUSA’s ratings for Growth, Momentum, Stability, and Sentiment here.
Click here to checkout our Retail Industry Report for 2022
IHG shares were trading at $62.41 per share on Thursday afternoon, up $1.81 (+2.99%). Year-to-date, IHG has declined -3.11%, versus a -14.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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