If there’s one thing that a major pandemic teaches us, it’s which sectors suffer the most & which can flourish. One group of stocks, including penny stocks, that faired the worst included companies with any exposure to travel and leisure. Whether you look at hotel stocks, airlines, leisure holding companies, or even online booking sites, some of the worst performers had something to do with travel.
While many bigger names like Booking Holdings (NASDAQ: BKNG) and Expedia (NASDAQ: EXPE) have made a massive recovery since March, there are still many travel and hotel stocks that are still much lower than they were at the end of 2019. Is this an opportunity for investors? Some think so. In fact, Travel Pulse recently shared findings from a survey of more than 5,800 respondents. Here are some of the findings:
- 61% feel hopeful about travel in 2021, of whom 83% will take two or more domestic trips, and 44% plan for two or more international getaways.
- Approximately 83 % of hopeful respondents plan to take at least two domestic trips, and about half as many (44%) are targeting two or more international getaways in 2021.
- More than one-third of respondents (35%) indicated the importance of face mask requirements.
When you factor in the outlook for the hotel industry, prospects appear brighter than some may think. The American Hotel & Lodging Association expects a few key hot points to lead growth:
- Hotel occupancy in the United States for 2021 is expected to average 52.5%, up from 44% in 2020.
- Occupancy rates are projected to rebound more significantly in 2022, reaching 61.4%.
- Hotel room revenue is expected to climb from $85 billion last year to $110 billion this year
- Business travelers are expected to be a driving force for a return to leisure travel.
With new cases seeing a much lower level in 2021 and new vaccines hitting the market, one of the hottest industries to look at might be travel and leisure. With this in mind, here are a few penny stocks to watch:
- Tuniu Corp. (NASDAQ: TOUR)
- Ashford Hospitality Trust (NYSE: AHT)
- Trivago (NASDAQ: TRVG)
- Remark Holdings (NASDAQ: MARK)
- Monaker Group, Inc. (NASDAQ: MKGI)
A lot of the stocks on this list may be familiar if you’ve been a reader for a while. Tuniu is an online leisure travel company in China. The company’s product portfolio includes things like packaged tours and travel-related services. It offers these through its Tuniu.com portal.
This month, the company appointed new directors to its board of directors and members to its compensation committee. Aside from this, there haven’t been many new updates from the company. But if you look at its filings, you’ll see a few interesting things to keep track of. Yiheng Capital Partners reported a 4.92% stake in the company. This came shortly after Fullshare Holdings reported a 4.6% stake in Tuniu.
With the turnaround in travel and hotel stocks, will TOUR be one of the names on your list this month?#2: Ashford Hospitality Trust
Another one of the hotel stocks to watch is Ashford Hospitality. The penny stock has been on our list for months as the industry continues to turn around. Positive sentiment on reopening has created a new niche of stocks: epicenter stocks. We’ve discussed this topic throughout the last 12 months, which Fundstrat’s Tom Lee originally coined. Companies hit hardest by the pandemic – hospitality, travel, some tech, healthcare, energy – may recover the quickest with a path to reopening.
In light of this, we’ve seen several travel & leisure holding companies and REITS gain. The company invests in full-service, upscale, and upper-upscale hotel properties in the U.S. We’re talking about brands like the Marriott, Hilton, Hyatt, Crowne Plaza Sheraton flags.
Recently, analysts at B. Riley boosted its price target for the stock. The firm increased its $2.50 target to $3. Currently, B. Riley maintains a Neutral rating on Ashford Hospitality. It’s also worth mentioning that ThornTree Capital Partners recently reported a 4.49% stake in the company this month. Considering hotels and properties under Ashford’s umbrella, a resurgence in travel and leisure could benefit the company.#3: Trivago
Popularized by its simple catchphrase, “Hotel, Trivago,” the online hotel booking company’s stock has steadily recovered from last year’s drop. It was also helped a bit during the big short-squeeze stock focus on places like Reddit earlier this year. Needless to say, TRVG stock has climbed over 45% year-to-date. Furthermore, optimism surrounding international travel hasn’t hurt things either.
According to a survey conducted by Trivago, the consumer response is in line with what I had outlined above. Their survey was from January 3rd -9th, and respondents were polled in the U.S. and U.K. There was a significant level of desire to travel. When asked what they would give up to travel again, 25% of both Britons and Americans say they’d give up all their savings to do it now. Roughly 40% say they’d give up sex for a year to get on the road right away. Nearly half would give up their job (the US, 48%; the UK, 41%). Will TRVG be one of the travel and hotel stocks to watch this year?#4: Remark Holdings
While it isn’t a travel or hotel company, Remark Holdings could indirectly benefit from the surge in the industry itself. The company has long been on our list of penny stocks to watch during the pandemic, thanks to growing attention on its thermal imaging systems. A flurry of tweets that went on for months displayed Remark’s technology in casinos, hotels, and convention centers. There weren’t many news stories to go along with tweets.
More recently, the company has been aligning with notable partners. Remark and HP Enterprise made headlines after HP names the company a “Silver Partner” in its technology partner program. Remark can bring opportunities to HPE, and, in turn, they will make Remark’s solutions available to their customers. The companies plan to market AI solutions for things like retail management, surveillance, and health security.#5: Monaker Group, Inc.
Finally, Monaker Group could be another travel and hotel stock to watch right now. The company specializes in technology to support the travel and leisure industry. Monaker is in the process of acquiring HotPlay Enterprise Limited. This is an in-game advertising and AdTech company. Following the acquisition, Monaker Group aims to transform into NextPlay Technologies, specializing in consumer-engaging products in the video gaming and travel verticals. Another thing to consider is that this combination will also leverage things like AI and blockchain solutions.
At the end of January, Monaker launched NextTrip Business. This is the company’s corporate travel and expense management SaaS solution. Considering it’s subscription-based, it could be set to drive recurring revenue for the company. The software solution helps companies track and control travel expenditures while offering employees a single platform to book flights, accommodations, and transportation reservations.
[Read More] 5 Penny Stocks For Your February 2021 Watch List
Tim Sikora, Chief Operations and Information Officer for NextTrip, said, “As business travel resumes, companies will focus on customizing and managing their travel expenses. NextTrip Business is designed to fulfill those needs and capitalize on increased scrutiny of travel and related expenses.”