Credit: Shutterstock photoTravel during this Labor Day weekend is poised to be the highest in seven years. Americans are planning to take a final trip before the end of summer, primarily due to record low gasoline prices and drop in airfares. This has significantly increased disposable income of travelers who now find it easier to hit the roads or take to the sky.
Labor Day travel volume is expected to grow for the fourth consecutive year. The Federal Reserve also noted in its Beige Book that all reporting districts said: "Corporate and leisure travels are expected to be up in 2015." Hence it will be a prudent idea to invest in leisure and travel related stocks that will benefit from this rise in traffic.
Busiest Labor Day Weekend in 7 Years
According to the American Automobile Association (AAA), about 35.5 million travelers are forecasted to travel by air and road during the weekend. This would be the highest travel volume since 2008. Labor Day weekend travel is anticipated to increase 1% from last year. The forecasted figure, who are expected to travel over 50 miles, also compares favorably with the past 6 years' figures. The Labor Day holiday travel period stretches from Sep 3 to Sep 7.
While most of the travelers are expected to travel by car, about 2.6 million travelers will travel by air, its highest volume of air travel for this holiday period since 2007. This is also 1.5% higher than the year-ago level. About 59,000 passengers per day will travel more during this weekend compared to the same period last year, according to Airlines for America.
Air travel has already witnessed record number of travelers flying this summer season surpassing the pre-recession high in 2007. Meanwhile, travel by other modes of transport including cruises, trains and buses are expected to make up 6.8% or 2.4 million of all travel this Labor Day holiday.
Record Low Gas Prices, Cheaper Flights
Gasoline prices during the Labor Day weekend are expected to be at its lowest level since 2004. The national average price of unleaded gasoline is at $2.46, almost a dollar less than the average price a year ago. The U.S. government forecasted that drop in retail gasoline prices by $1 or more has resulted into savings of $700 for American households. Perhaps, this explains the jump in car travel.
Airfares during this Labor Day period are also expected to decline by 1%. The Airlines for America group's chief economist John Heimlich said that with more availability of flights and at a cheaper cost, "air travel continues to be more accessible and a bargain for cost-conscience consumers."
However, travelers need to bear higher lodging costs this year. The average stay in both Two Diamond and Three Diamond hotel are expected to be higher this year. Nevertheless, rise in prices shouldn't be a deterrent to travelers as disposable income is expected to increase by 3.7% from last year.
4 Stocks to Ride the Travel Boom
Banking on cheaper fuel prices, drop in airline fares and an uptick in disposable income, millions of Americans will travel to one last summer getaway. They are expected to defy the notion that Americans travel less if the final summer holiday falls later in the season.
Increase in travel will lead to an uptick in demand for air and cruise tickets, car rentals and hotel rooms. Travel agencies will also benefit in this situation. Hence it will be sensible to invest in travel and leisure companies positioned to grow in the near term. Our selection is also backed by good Zacks Growth Score and Zacks Rank.
We narrowed down our choices with the help of our style score system .
Our research shows that stocks with Growth Style Scores of 'A' or 'B' when combined Zacks Rank # 1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the growth investing space.
JetBlue Airways CorporationJBLU is a low-fare and low-cost passenger airline. JBLU holds a Zacks Rank #1 (Strong Buy) and has a Growth Style Score of 'B.'
JBLU has expected earnings growth of 165.1% for the current year. In the past two months, the Zacks Consensus Estimate for the current year was revised 5.1% higher.
Carnival CorpCCL is one of the world's largest multiple-night cruise companies. CCL holds a Zacks Rank #2 (Buy) and has a Growth Style Score of 'B.'
CCL has expected earnings growth of 28.5% for the current year. Over the past two months, the Zacks Consensus Estimate for the current year was revised 0.8% higher.
Diamond Resorts International IncDRII operates resorts in many parts of the world including the U.S. DRII holds a Zacks Rank #2 (Buy) and has a Growth Style Score of 'B.'
DRII has expected earnings growth of 88.7% for the current year. In the past two months, the Zacks Consensus Estimate for the current year was revised 8.2% higher.
Travelport Worldwide LtdTVPT is a Travel Commerce Platform providing solutions for the global travel and tourism industry. TVPT holds a Zacks Rank #1 (Strong Buy) and has a Growth Style Score of 'A.'
TVPT has expected earnings growth of 225.4% for the current year. Over the past two months, the Zacks Consensus Estimate for the current year was revised 3.7% higher.
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CARNIVAL CORP (CCL): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
