Best Travel Stocks To Buy In May

Key Insights

• Carnival stock has recently moved to yearly lows as rising rates put pressure on the indebted company. 
• At the same time, Carnival stock declined to attractive valuation levels, which could attract speculative traders.
• Tripadvisor is also trading near lows, but analyst estimates for the next year have already started to move higher.

S&P 500 has been extremely volatile in recent weeks as traders continued to search for attractive investments amid rising rates and general uncertainty. Travel-related stocks have also experienced significant volatility. Today, we’ll take a look at two stocks that are trading near multi-month lows and whose valuation levels look interesting.

Carnival Corporation

Cruise lines have been severely hit by the coronavirus pandemic. The recent developments in the oil markets have put additional pressure on the industry.

As a result, Carnival stock has been mostly moving lower in recent months. Previously, the market expected that pent-up demand would provide sufficient support for Carnival and other companies in the industry. Pent-up demand is real, but it has failed to serve as a significant positive catalyst for Carnival stock.

It looks that the main problem is the company’s debt, which increased materially during the pandemic. Rising yields have already put pressure on the shares of indebted companies.

At the same time, analysts believe that the company will be able to return to profitability in the next year and expect that Carnival will report earnings of $1.33 per share. Analyst estimates have been moving lower in recent months, but the stock is trading at roughly 10 forward P/E, which looks cheap enough if you believe that demand for the company’s services will be strong in the upcoming years.

Tripadvisor

Tripadvisor is another travel-related stock that has fallen out of market’s favor. Back in March 2021, the stock touched highs near the $65 level but lost momentum and moved towards the $25 level.

The company is expected to report earnings of $0.81 per share in the current year and $1.7 per share in the next year, so the stock is trading at 14 forward P/E, which looks reasonable in the current market environment.

Tripadvisor expects that summer travel demand will be strong, which will boost its business. Interestingly, analyst estimates for the next year have already started to move higher, but analysts remain cautious about the company’s performance in 2022. Nevertheless, the stock looks interesting at current levels.

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