Most travel and tourism stocks hit the bottom line during the coronavirus pandemic. This sector was the first one which suffered severe damage, as countries forbade travel and restricted movement. The crisis isn’t over yet, and while the lockdowns are lifted in most cases, it will require a long time to resume flying or hotel businesses as they were pre-pandemic.
Still, the restrictions won’t last forever, and now is an excellent time to grab travel stocks, if you have the patience and feel adventurous. Their prices are extremely low, and it would be a good investment in the long-term. Here are two stocks, which the analysts recommend as a good choice.
Southwest was injured two-fold during the last sector. While the pandemic caused the stock lots of grief, there was also Warren Buffett’s decision about selling his position in the company, which he announced at the Berkshire Hathaway investor meeting on May 2. This news, atop the pandemic crisis, sent Southwest tumbling down by 47%.
However, while other airline stocks face severe challenges due to travel restrictions and poor consumer sentiment, experts believe that Southwest will rally thanks to its strong balance sheet and robust business model. The company has been working on profit for 47 consecutive years. It also has a reputation for good customer service.
Southwest is well-positioned to withstand the crisis due to its financial strength. It will easily benefit from a rebound in domestic travel when the industry recovers.
Carnival endured several massive outbreaks of the disease on its Princess line cruises. It also reported a $731 goodwill impairment charge in Q1 after writing down the value of its vessels. As a result, the stock collapsed by 70%, but thankfully Carnaval has enough liquidity to weather the crisis. This company is one of the highest-profile stocks in its sector.
Carnaval raised a huge amount of capital to help itself recover from the crisis. It plans to resume the service soon. But even if that won’t be possible, the company could easily make it through 2020, according to its CEO Arnold Donald.
- Trading Instrument