We recently compiled a list of the 13 Best Vacation Stocks to Buy Now. In this article, we are going to take a look at where Wynn Resorts, Limited (NASDAQ:WYNN) stands against the other vacation stocks.
In early 2024, The World Travel & Tourism Council projected a strong year for travel & tourism, with the sector’s global economic contribution expected to touch an all-time high of $11.1 trillion. As per the global tourism body’s 2024 Economic Impact Research (EIR), travel & tourism should be able to contribute an additional $770 billion over its previous record. WTTC anticipates that ~142 countries, of the 185 analysed, are expected to outperform previous national records.
WTTC forecasts a strong future for the next decade, characterized by healthy growth and unmatched career opportunities. By 2034, the sector is expected to supercharge the global economy with a staggering $16 trillion, accounting for ~11.4% of the entire economic landscape.
Travel and Vacationing in 2024 and Beyond
In 2024, the travel sector continues to break boundaries. Mastercard Economics Institute expects that this momentum will continue, with consumers prioritizing meaningful experiences and earmarking more of their budgets to travel.
Apart from air travel, cruise vacationing saw extraordinary growth, outpacing 2019 records. Through 1Q 2024, the US travel story was characterized by contrasting outbound and inbound dynamics. By November 2022, the US travelers vacationing overseas (excluding Canada and Mexico) outpaced 2019 levels. As of March 2024, the US travel overseas stood at ~20% above that level.
In comparison, the visitor traffic arrivals in the US from abroad were ~6% below 2019 levels as of March 2024. At this pace, the Economics Institute estimated that foreign passenger traffic in the US is expected to surpass 2019 levels later in 2024.
As per the Conference Board survey of consumer attitudes and buying plans in the US, the data as of April 2024 demonstrates that around 1 in 5 of the survey respondents expect to travel internationally in the upcoming 6 months. This was the record high since the survey began in February 1967. During this similar time in 2020, only 1 in every 20 Americans wanted to travel.
Recent Trends in Vacations
A big trend for 2024 remains the preference for experiential traveling over traditional celebrations for achieving some milestones. A recent survey demonstrated that ~40% of respondents continue to plan vacations for celebrating milestone occasions in 2024. One major shift in travel trends is the concept of a journey as the final destination. While travelers are seeking rail journeys along with epic boat trips, some travelers are opting for extended stopovers in certain destinations. This helps in turning layovers into small vacations.
The Cruise Lines International Association expects that ~82% of those who have cruised are expected to cruise again. The vacation rental market has been pegged at US$99.6 billion in 2023 and should be able to compound at more than 3% between 2024 and 2032 (as per Global Market Insights). This is expected on the back of elevated demand from the younger generation as they seek unique and authentic travel experiences. Notably, millennials and Gen Z are prioritizing experiences rather than material possessions, resulting in an increased demand for engaging and authentic travel.
Therefore, growth in the vacation rental market should stem from the increased use of online booking platforms, advancements in AI-driven property management technology, and the adoption of remote working.
Our methodology
To list the 13 Best Vacation Stocks to Buy Now, we used the Finviz screener to compile a list of 20 stocks catering to relevant industries. We then ranked the stocks in ascending order of their hedge fund sentiment, as of Q2 2024, and chose the following 13 companies.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of a luxury hotel tower surrounded by lush green landscaping.
Wynn Resorts, Limited (NASDAQ:WYNN)
Number of Hedge Fund Holders: 42
Wynn Resorts, Limited (NASDAQ:WYNN) owns and operates hotels and casino resorts. It provides amenities like guest rooms and suites, restaurants, golf courses, spas, bars, and other vacation-related and leisure facilities.
Wynn Resorts, Limited (NASDAQ: WYNN) continues to possess attractive long-term growth opportunities in Macao, backed by its high-end iconic brand. As a result, the company should be able to capture gross gaming revenue share moving forward. Its Las Vegas revenue and adjusted EBITDA margins are expected to be supported by cost-efficiency improvements and revenue scale for the upcoming years. The company’s strategic locations in critical tourist destinations such as Macau and Las Vegas are expected to act as major strengths.
Considering the renewal of the gaming concession contract for another 10 years, Wall Street believes that Wynn Macau SA is well-placed to capitalize on the region’s growth. In its 2Q 2024 results, Wynn Resorts, Limited (NASDAQ:WYNN) highlighted its strength throughout its business. The company continues to focus on growth as the construction of Wynn Al Marjan Island in the UAE has been advancing rapidly. Also, Wynn Resorts, Limited (NASDAQ: WYNN) recently finalized a transaction to acquire the pro-rata share of land on Al Marjan Island Three. This should help the company secure a substantial land bank for strong future development opportunities.
As of 2Q 2024, 42 hedge funds held long positions in Wynn Resorts, Limited (NASDAQ:WYNN). Analysts at Seaport Res Ptn upgraded the shares of Wynn Resorts, Limited (NASDAQ:WYNN) from a “Hold” rating to a “Strong-buy” rating on 30th May. Baron Funds, an investment management company, released its fourth quarter 2023 investor letter and mentioned Wynn Resorts, Limited (NASDAQ:WYNN). Here is what the fund said:
“The shares of Wynn Resorts, Limited (NASDAQ:WYNN), an owner and operator of hotels and casino resorts, declined modestly in the most recent quarter, in part due to concerns about economic weakness in China.
We remain optimistic about the multi-year prospects for the company. We believe the ongoing re-emergence of business activity in Macau will drive additional shareholder value. If cash flow returns to the level achieved in 2019 prior to COVID-19, we believe Wynn’s shares will increase 30% to 50% higher than where they have recently traded.
We believe additional drivers for future value creation beyond a re-emergence in Macau business activity include: (i) our expectation for long-term growth opportunities in the company’s U.S.-centric markets of Las Vegas and Boston, including an expansion of Wynn’s Encore Boston Harbor resort; (ii) Wynn’s plans to develop an integrated resort in the United Arab Emirates with 1,500 hotel rooms and a casino that is similar in size to that of Encore Boston Harbor; (iii) opportunities to improve cash-flow margins by rightsizing labor and achieving lower staff costs in Macau; (iv) the possibility that Wynn is granted a New York casino license; and (v) an expansion in the company’s valuation multiple to levels achieved prior to the pandemic.”
Overall WYNN ranks 4th on our list of the best vacation stocks to buy. While we acknowledge the potential of WYNN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than WYNN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.