Traveling Through the Storm
After a troubling number of delays throughout the holiday weekend, airline stocks have continued their three-month surge with investors acknowledging the exponential rise in traveling. Several airlines such as Delta, Southwest, and United have surpassed multi-year highs, mostly due to the crippled sales figures persisting from the Covid-19 pandemic. In the past year, delays related to extreme weather or even computer-related issues have encompassed the space, but shareholders value the long-term strength the consumer’s wallet has shown recently. From the previous quarter’s earnings reports, these same leading airlines have reported better-than-expected sales demand, increasing their guidance for the rest of the year. Year-to-date, both United and Delta Airlines have posted returns of over 47%, with American just behind at 42%.
Alongside airline stocks, other popular indicators for increased travel are cruise lines, which have also had extraordinary performances in recent months. With accelerated post-pandemic demand and resilient consumers, cruises have remained a strong investment for the travel industry. In the S&P 500, market leaders in the cruise line sector hold three spots in the top seven performers for year-to-date returns. With six-month returns better than the majority of the largest American-based companies, Carnival Corp boasts 135%, Royal Caribbean Cruises has grown 108%, and Norwegian Cruise Line climbed 79%. As pent-up demand continues to unleash across consumer-led travel, it will be interesting to see whether elevated prices or recessionary concerns seem to affect these companies’ top-lines in the next few years.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.