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Analysis of Travel Industry Stocks
02 Mar 2021 (233 views)

During the past two months, the prices of stocks in the travel industry (i.e. airlines, hotels, cruise operators) have increased sharply due to optimism for the industry with the rollout of the vaccnation.

The investors expect the vaccination to be successful and the travel industry can get back to normal within one or two years.

I looked at the financial figures to see if the optimism is justified. See the chart below.

It is difficult to draw any conclusion, but I like to give some of my observations.

1.   It is difficult to justify a price to sale of more than 1.0 for an industry where the margin is thin. On this metric, Cathay Pacific (0.5) and United (1.08) looks reasonable.

2.   It is diffcult to justify a forward PE ratio of more than 30. On this metric, Delta, United and South West looks reasonable. 

3.   Many of the stocks have increased by more than 2 times over the 52 week low. Those below 2 times are Cathay Pacific (1.5) and Singapore Airlines( 1.6)

I wonder if Cathay Pacific deserves a closer look. As it is based in Hong Kong, it could be disadvantaged over the uncertainty due to China's control.

Note - This is not financial advice. I am sharing my personal opinion.

 

 



Analysis of Travel Industry Stocks
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During the past two months, the prices of stocks in the travel industry (i.e. airlines, hotels, cruise operators) have increased sharply due to optimism for the industry with the rollout of the vaccnation.

The investors expect the vaccination to be successful and the travel industry can get back to normal within one or two years.

I looked at the financial figures to see if the optimism is justified. See the chart below.

It is difficult to draw any conclusion, but I like to give some of my observations.

1.   It is difficult to justify a price to sale of more than 1.0 for an industry where the margin is thin. On this metric, Cathay Pacific (0.5) and United (1.08) looks reasonable.

2.   It is diffcult to justify a forward PE ratio of more than 30. On this metric, Delta, United and South West looks reasonable. 

3.   Many of the stocks have increased by more than 2 times over the 52 week low. Those below 2 times are Cathay Pacific (1.5) and Singapore Airlines( 1.6)

I wonder if Cathay Pacific deserves a closer look. As it is based in Hong Kong, it could be disadvantaged over the uncertainty due to China's control.

Note - This is not financial advice. I am sharing my personal opinion.