In this article, we will take a look at the 12 most undervalued travel stocks to buy according to hedge funds. To see more such companies, go directly to 5 Most Undervalued Travel Stocks To Buy According To Hedge Funds.
Despite the rising inflation and tough market conditions globally, the demand in the travel industry is showing no signs of cooling. In fact, estimates suggest the global travel industry will see huge growth in 2023. According to a Bloomberg report, global tourism in 2023 is expected to reach 80% to 95% of pre-pandemic levels. The report, which quoted data from the United Nations World Tourism Organization, said the tourism industry reached about 63% of the pre-pandemic levels in 2022.
However, the United Nations World Tourism Organization said travel patterns will be affected amid financial worries and inflation. For example, the UN body said travelers will expect more value for money this year and are expected to stay closer to home. The report also said that growth in travel demand in the Middle East and Europe will be the fastest. These two regions are expected to catch up with the pre-pandemic levels this year when it comes to travel and tourism.
According to the Bloomberg report, about half of American travelers say financial pressures will impact their travel decisions in the coming six months, according to a January 2023 sentiment survey from tourism market research firm Longwoods International. A whopping 56% of the survey respondents said airfare is the biggest factor in this equation.
Photo by Hilmi Can Taşkıran on Unsplash
Our Methodology
For this article, we first used the Finviz stock screener to find stocks from the travel services and resorts & casinos industries of the consumer cyclical sector. We got a long list of stocks, out of which we narrowed down to only those that had forward PE ratios of 20 or less as of January 27. We then picked 12 stocks from this resultant dataset which had the highest number of hedge fund stakeholders as of the end of the third quarter. To find that metric we used Insider Monkey’s database of 920 hedge funds. Forward PE ratio data was taken from the “statistics” tab of these companies’ Yahoo Finance pages.
The list is ranked in ascending order of the number of hedge funds having stakes in these companies.
12. Travelzoo (NASDAQ:TZOO)
Number of Hedge Fund Holders: 5
PE Ratio as of January 27: 6.98
Travelzoo (NASDAQ:TZOO) is a New York-based company that has an interesting business model in the travel industry. Travelzoo (NASDAQ:TZOO) on its platforms publishes deals related to travel, entertainment centers, restaurants and spas. In December, Travelzoo (NASDAQ:TZOO) stock jumped as much as 9% after Travelzoo (NASDAQ:TZOO) posted strong guidance for the fourth quarter. Travelzoo (NASDAQ:TZOO) said it expects its Q4 revenue to come in at about $18.5 million, up 31% Y/Y. This easily beats consensus of $17.60 million.
Analysts believe Travelzoo (NASDAQ:TZOO)’s business model is diversified. Travelzoo (NASDAQ:TZOO) is not totally reliant on the travel industry. It also thrives on the domestic entertainment activities. Travelzoo (NASDAQ:TZOO) has a whopping 30 million members and works with more than 5,000 travel suppliers.
11. Bluegreen Vacations Holding Corporation (NYSE:BVH)
Number of Hedge Fund Holders: 13
PE Ratio as of January 27: 8.8
Bluegreen Vacations Holding Corporation (NYSE:BVH) is a small player in the travel and vacation rentals industry. Bluegreen Vacations Holding Corporation (NYSE:BVH) has a market cap of $715 million. Bluegreen Vacations Holding Corporation (NYSE:BVH) operates vacation resorts and vacation rentals. In the third quarter, Bluegreen Vacations Holding Corporation (NYSE:BVH)’s GAAP EPS came in at $1.19, beating estimates by $0.12. Revenue in the period jumped about 17% to total $250.8 million, beating estimates by $13.73 million. Bluegreen Vacations said its system-wide sales of vacation ownership interests jumped 15% to reach $206.9 million from $180.6 million in the prior year quarter. Number of guest tours increased by 11% in the quarter to 69,490.
A total of 13 hedge funds tracked by Insider Monkey reported having stakes in Bluegreen Vacations Holding Corporation (NYSE:BVH). The total value of these stakes was about $22.1 million.
10. Playa Hotels & Resorts N.V. (NASDAQ:PLYA)
Number of Hedge Fund Holders: 27
PE Ratio as of January 27: 17.14
Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is a Virginia-based hotels and resorts operator. In November, Playa Hotels & Resorts N.V. (NASDAQ:PLYA) posted its third quarter results. Playa Hotels & Resorts N.V. (NASDAQ:PLYA)’s revenue in the period jumped about 35% to come in at $206.6 million, beating estimates by $10.01 million. Adjusted EPS in the quarter totaled $0.04, missing estimates by $0.02.
A total of 27 hedge funds tracked by Insider Monkey reported having stakes in Playa Hotels & Resorts N.V. (NASDAQ:PLYA) as of the end of the third quarter. The total worth of these stakes was $358 million.
9. Hilton Grand Vacations Inc. (NYSE:HGV)
Number of Hedge Fund Holders: 29
PE Ratio as of January 27: 16.27
Hilton Grand Vacations Inc. (NYSE:HGV) is a Florida-based company that operates hotels and resorts globally. With a PE ratio of 16.27, Hilton Grand Vacations Inc. (NYSE:HGV) is one of the most undervalued travel stocks to buy according to hedge funds.
A total of 29 hedge funds tracked by Insider Monkey reported having stakes in Hilton Grand Vacations Inc. (NYSE:HGV) as of the end of the third quarter. The total value of these stakes was about $1 billion.
8. Tripadvisor, Inc. (NASDAQ:TRIP)
Number of Hedge Fund Holders: 33
PE Ratio as of January 27: 15.90
Tripadvisor, Inc. (NASDAQ:TRIP) ranks 8th in our list of the most undervalued travel stocks to buy according to hedge funds. As of the end of the September quarter of 2022, 33 hedge funds reported having stakes in Tripadvisor, Inc. (NASDAQ:TRIP). The total value of these stakes was about $799 million. The biggest stakeholder of Tripadvisor, Inc. (NASDAQ:TRIP) during this period was Paul Reeder and Edward Shapiro’s PAR Capital Management, which has a $199 million stake in Tripadvisor, Inc. (NASDAQ:TRIP).
Tripadvisor, Inc. (NASDAQ:TRIP) shares took a hit on November after the company posted weak Q3 results. TripAdvisor’s management said it also expected FX headwinds to impact its fourth quarter results. Consolidated revenue is expected to increase by a low-single digit percentage from 2019. However, in the fourth quarter, Tripadvisor, Inc. (NASDAQ:TRIP) is expecting a “modest” slowdown when compared to the third quarter.
These concerns are keeping Tripadvisor, Inc. (NASDAQ:TRIP)’s valuation depressed. Tripadvisor, Inc. (NASDAQ:TRIP) might be a decent travel pick for long-term investors.
Here is what GreenWood Investors specifically said about Tripadvisor, Inc. (NASDAQ:TRIP) in its Q2 2022 investor letter:
“Tripadvisor, Inc. (NASDAQ:TRIP)’s world class board has appointed a new CEO to optimize every aspect of its core business — something it has long gone without. Matt Goldberg’s background at The Trade Desk (TTD) and multiple direct-to-consumer web properties (such as the Lonely Planet) make him perfectly positioned to better monetize TripAdvisor’s long admired position as the world’s most visited travel website. The exciting part of Matt’s mission is that he wants to make core TripAdvisor great again, in its hotel auction, in the TripAdvisor Plus model, and in the new advertising verticals it has developed for hotels, restaurants and tour operators.
This year’s travel season is absolutely on fire, but there are substantially more legs to this rally. Americans are traveling abroad 30% less frequently than before Covid. This is a core demographic for TripAdvisor’s traffic and purchase intent. So while the market worries that certain travel businesses are experiencing peak earnings in 2022, we believe there is substantial room to run for those focused on a more international destination, like TripAdvisor. But the real upside will come from TripAdvisor’s determination to extract value from its two fastest-growing supply aggregation properties: Viator and The Fork. Both platforms dominate their respective fields and are aggressively acquiring new customers. Viator’s experiences supply is without comparison in the world, and it is currently processing twice the amount of transactions than it was prior to Covid. Given over 80% of travel experiences are still booked offline, Viator looks as attractive to us, if not more so, than booking.com did a few decades ago.”
7. Travel + Leisure Co. (NYSE:TNL)
Number of Hedge Fund Holders: 35
PE Ratio as of January 27: 9.60
Travel + Leisure Co. (NYSE:TNL) ranks 7th in our list of the most undervalued travel stocks to buy according to hedge funds. Travel + Leisure Co. (NYSE:TNL) sells vacation properties with a shared ownership model. Of the 920 hedge funds tracked by Insider Monkey as of the end of the third quarter, 35 hedge funds had stakes in Travel + Leisure Co. (NYSE:TNL). The total value of these stakes was $423 million. Travel + Leisure Co. (NYSE:TNL) is a dividend-paying company. Travel + Leisure Co. (NYSE:TNL)’s dividend yield stands at 3.82% as of January 27. In November, Travel + Leisure Co. (NYSE:TNL) declared a dividend of $0.40 per share, in-line with the previous quarterly dividend. The dividend was payable on December 30.
6. Boyd Gaming Corporation (NYSE:BYD)
Number of Hedge Fund Holders: 36
PE Ratio as of January 27: 11.77
Boyd Gaming Corporation (NYSE:BYD) operates hotels and casinos and is among the biggest beneficiaries of the travel rebound in the world. Earlier this month, investment firm Credit Suisse started covering Boyd Gaming Corporation (NYSE:BYD) with an Outperform rating. Credit Suisse’s analyst Benjamin Chaiken praised Boyd Gaming Corporation (NYSE:BYD)’s growth opportunities in the iGaming industry. The firm also cited Boyd Gaming Corporation (NYSE:BYD)’s valuation of 12.5X the 2024 free cash flow estimate for its bullish rating. Credit Suisse set an $82 price target on Boyd Gaming Corporation (NYSE:BYD).
In December 2022, Boyd Gaming Corporation (NYSE:BYD) announced a dividend of $0.15 per share, in line with previous. Forward dividend yield at the time came in at 1.02%. Of the 920 hedge funds tracked by Insider Monkey, 36 hedge funds had stakes in Boyd Gaming Corporation (NYSE:BYD).
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Disclosure: None. 12 Most Undervalued Travel Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.