People Are Itching to Travel, But Will Travel Stocks See Any Love?

I am one of those people who is anxious to get back to traveling. I’m used to spending the weekend in the Florida Keys, or on the Gulf Coast of Florida.

Plus, I had plans to spend quite a bit of time in Maryland with my family this year.

I did decide to head up there in June for my brother’s wedding. It was a quarter of the size it was supposed to be and we were all given masks printed with the names of the bride and groom. Most of it was outside and the part in the church was socially distanced.

But, even back in June, the airports and the airplanes weren’t anywhere near as empty as I thought they were going to be. Yes, we all had enough room on the plane to leave the middle seats open, but the plane was still at half capacity. I haven’t seen it myself, but evidence would suggest that’s all changed now. The Transportation Security Administration (TSA) reports daily screening numbers. Last year, that daily number would be between 2.3 and 2.7 million passengers. In April, that statistic fell below 90,000. That number has been climbing and we’re now back around 1 million per day.

Cruise lines have been issuing press releases that state they are ready to get people back onboard with mandatory testing. But there doesn’t seem to be any standard for when crew and passengers need to be tested. Plus, it opens the whole discussion of who should be paying for those tests, especially if a rapid test is required.

This doesn’t even take into consideration national travel, which opens up a whole other set of issues. Different countries and potentially different regions are going to require testing and even vaccinations.

Either way, people are antsy to travel. There’s no doubt about that. Money pouring into travel will in turn mean money for investors. Especially if you can time it right. It got me thinking if now is the time to add travel stocks back into your portfolio.

So today I went to the stock screener on the Weiss Ratings website and selected industry search. I searched for transportation since that’s where all the cruise lines and airlines would be. Let’s see the top picks.

First up, we have Canadian Pacific Railway Ltd. (NYSE: CP, Rated “B”). Canadian Pacific transports automotive, coal, food products, grain and many other industrials across North America by rail. It was founded in 1881 and it’s always working with the goal to move customer goods further, faster and more efficiently than ever before.

This sounds pretty old-fashioned, but this isn’t your grandpa’s railroad anymore. The company is all about innovation and technology that can anticipate issues and improve safety, because in the end, that’s how you improve efficiency and save money. The company has patented technology that accumulates data on locomotive railcars and track infrastructure. Then it uses predictive analytics to ensure smooth transport.

Shares have been performing well, even during the pandemic. In the past few weeks we’ve seen a correction, but this stock is still screaming “Buy”, so that’s an opportunity to get in at a lower entry price.

Next up, we have Expeditors International of Washington, Inc. (Nasdaq: EXPD, Rated “B”). Expeditors is a Fortune 500 service-based logistics company with locations in over 60 countries on six continents. Since it’s service-based, it doesn’t own the aircraft, ships or trucks that it uses every day. This allows for the company to be nimble in providing specialized and efficient routes for any customers' specifications.

The company was recently upgraded from a “B-” to a “B” when its earnings and total revenue increased in August. 

Lastly, we have Marten Transport, Ltd. (Nasdaq: MRTN, Rated “B”). Roger Marten founded this transport company at the age of 17 with one truck that delivered milk and dairy products. The company now has a fleet of over 3,000 tractors and specializes in temperature sensitive shipping by truckload. Sounds like a good industry to be in when groceries were in high demand. We’re sure that’s why Marten has been holding a solid “Buy” rating since April.

The truth is, all the “Buy” rated stocks in the transportation industry were companies that move stuff instead of people.

So where are our cruise lines? Well, Carnival Corporation & Plc (NYSE: CCL, Rated “D”), Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH, Rated “D”) and Royal Caribbean Group (NYSE: RCL, Rated “D”) are all sitting in the sell category with “D” ratings.

How about our airlines? Delta Air Lines, Inc. (NYSE: DAL, Rated “D”), American Airlines Group Inc. (Nasdaq: AAL, Rated “D-”) and United Airlines Holdings, Inc. (Nasdaq: UAL, Rated “D”) all have a “D” rating as well. Southwest Airlines Co. (NYSE: LUV, Rated “D+”) is still in that sell category, but is holding a “D+” rating.

It’s not time to jump into these quite yet. Instead, you can keep checking the ratings to see when they cross into that hold range. Remember, our ratings on stocks are run daily, so you can see right away when something changes that might make you want to adjust your holdings.

Best,

Kelly Green