Leisure stocks along with the stock market have been rallying this week. On Monday, Pfizer (PFE Stock Report) and BioNTech (BNTX Stock Report) announced ground-breaking news. The two biotech giants joined forces to create a COVID-19 vaccine and have achieved a 90% infection prevention rate. With that in mind, many are beginning to see the light at the end of the tunnel for the pandemic. Granted, these biotech stocks rallied upon the positive news. The question now is, which other stocks stand to benefit from this?
Investors are looking for top leisure stocks to buy as the sector appears to be rebounding strongly from Pfizer’s vaccine news. This is understandable as the possibility of a working vaccine (even if preliminary) has gotten the general public’s hopes up. For example, the cruise company Royal Caribbean Cruises Ltd (RCL Stock Report) has seen a rise of 28% in share price in the past week. Even theme parks such as Six Flags (SIX Stock Report) and SeaWorld Entertainment (SEAS Stock Report) saw hikes of 25% and 22% respectively in the same period.
It appears to me that investors are flocking to these leisure companies now as they anticipate consumers to do the same. However, the question remains, which companies stand to benefit the most from this week’s vaccine news? With all that being said, here is a list of top leisure stocks to watch this week.
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First on this list is Carnival Corporation (CCL Stock Report). Carnival is a British-American cruise operator. The company is the world’s largest travel leisure company, with a combined fleet of over 100 vessels across 10 cruise line brands. It is based in Florida with operations in the UK and in Panama. Over the last week, Carnival has seen a remarkable 33% rise in its share prices. As a leader in the cruise industry, this is no surprise.
The company did not have a good third-quarter as did other leisure companies. Carnival saw an adjusted net loss of $1.7 billion in the last quarter. However, the company reported ending the quarter with $8.2 billion in cash and cash equivalents. News of a possible vaccine could provide the Carnival with a key opportunity to further enhance future liquidity as well. The company also reported that its cruise lines Costa and AIDA would be resuming. Likewise, its cumulative advanced bookings for the second half of 2021 has increased despite minimal advertising or marketing.
Vaccine news aside, Carnival also received good news prior to this from the Centers for Disease Control and Prevention (CDC). The CDC has agreed to allow cruises to operate conditionally. Despite being limited to seven-day cruises, this is a good sign for the cruise industry as a whole. Upon obtaining a conditional sailing permit, the company should be able to organize shorter cruise experiences for the general public.
Furthermore, Carnival also reported strong booking volumes for its “2022 World Cruise: Extraordinary Horizons” since opening. The cruise trip has sold more than 50 percent of its segments through the halfway point in Shanghai. This shows the strong demand for luxury travelers to book a long vacation experience.Top Leisure Stocks To Buy [Or sell]: Expedia Group Inc.
Next up, Expedia Group Inc. (EXPE Stock Report) is also one of the top leisure stocks to watch this week. Expedia is an American online travel shopping company for consumer and small business travel. It operates via travel fare aggregating websites and travels metasearch engines. These include CarRentals.com, Expedia.com, HomeAway, Hotels.com, Hotwire.com, Orbitz, Travelocity, Trivago, and Vrbo. The company has seen a meteoric 26% rise in share price in the past week. That brings the company’s stock price to a 6-months high. This is expected as traders likely anticipate excited consumers to use its metasearch engines in droves upon this Monday’s optimistic vaccine news.
Expedia reported a 68% decrease in total gross bookings in the third quarter. This is reflected in a decrease across lodging, air, and other travel products. However, one of its search engines Vrbo helped sustain lodging bookings and showed year-over-year growth in the quarter. This was partially offset by Vrbo via a 14% increase in revenue per room night. The impacts of COVID-19 are apparent in most parts of its third-quarter earnings.
From the company’s recent event, the company appears to be fortifying its customer experiences. This would be a good move on Expedia’s end as they anticipate a post-pandemic flood of clients. It reported reaching a multi-year agreement with Mastercard (MA Stock Report) on the use of payment products. This agreement will supposedly improve the efficiency, speed, and economics of payment transactions. Additionally, the company also released a new version of its Brand Expedia, Hotwire, and Vrbo iOS apps. This allows the company to take advantage of new widget capabilities available on iOS 14.
The company claims that this will provide consumers with new ways to view its latest travel deals and easily access upcoming reservations. Expedia Group appears to be prepped for a vaccine release. Should investors be keeping a close eye on EXPE stock?Top Leisure Stocks To Buy [Or sell]: Walt Disney Company
The Walt Disney Company (DIS Stock Report) has seen a 12% increase in share prices in the past week. This household entertainment company is currently traded near its pre-pandemic levels as of 12.40 pm ET. Disney has seen steady growth in the months since the COVID-19 pandemic hit. With social distancing restrictions in place, the company lost several sources of revenue. Two notable ones would be its box office revenue from movie releases and Disneyland theme park/resort revenue.
In its third-quarter earnings posted in August, the company reported an 86% year-over-year decrease in revenue for its Parks, Experiences, and Products segment. This contributed to the 42% drop in total revenues year-over-year. Despite the challenges faced by the company this year, it has managed to build on the success of its streaming service Disney+. This is not an easy feat considering Disney is competing with Netflix (NFLX Stock Report) and Amazon (AMZN Stock Report) in this area of entertainment.
It has a robust portfolio of titles ranging from Disney classics to the Marvel Cinematic Universe, and even the Star Wars IP. The company reports a total of over 100 million paid subscriptions which likely helped mitigate COVID-19 related losses to a certain extent.
In short, Disney has done better than other top leisure stocks because of its vast sources of revenue. Despite popular stay at home stocks like Zoom (ZM Stock Report) taking a massive hit this week, Disney appears to be in a comfortable spot for now. With the possibility of a vaccine, the company could resume its theme park operations sooner than we have initially expected. Disney is slated to release its fourth-quarter fiscal on November 12. With all this in mind, could DIS stocks be a top leisure stock to have in your portfolio?