As I sat down to write this piece, a segment about the launch of a new cruise line ran on television. Yes, a cruise line, asserts Mike Larson, editor of Safe Money Report.
Called Virgin Voyages, and backed by British billionaire Richard Branson, the company wants to set sail for the first time in July. It had previously planned a splashy spring 2020 launch in New York City. But as you would expect, that got shelved when the COVID-19 pandemic struck with full force.
Before they can board, passengers will be required to prove they’ve received one of the available COVID-19 vaccines. Competitor Royal Caribbean (RCL) announced a similar plan recently, too, re-positioning a ship to Israel. The inoculation process is far enough along there that sailing vaccinated-only passenger cruises is a viable option.
But it’s not just cruise companies showing signs of life again. Hotel occupancy rates in the US averaged 49% in early March. That was the highest since October, according to research firm STR (though well below the pre-pandemic 65%).
Meanwhile, the Transportation Security Administration (TSA) continues to see more passengers filter through its checkpoints. Officers screened 1.35 million people at US airports in a single day last week. That was the most since March 15, 2020—and well above the pandemic low of 87,500 last April.
I doubt anyone would call this a travel “boom.” But it’s definitely an improvement. And it clearly speaks to people’s desire to get back on the proverbial road. To get out and explore the world again after a year of mostly being locked down.
If it’s done SAFELY...and if the vaccination efforts continue to gain steam such that we hit a broad-based immunity level sooner rather than later...this development is ultimately a healthy thing from an economic and societal perspective. It also creates market opportunities for traders and investors.
You can find travel and leisure-based funds that target the sector, for instance. They include the Invesco Dynamic Leisure and Entertainment ETF (PEJ) and the U.S. Global Jets ETF (JETS).
But many travel companies face significant balance-sheet problems and other issues due to the pandemic. So, I prefer taking a more targeted approach.
One of my recent recommendations, for instance, was a higher-yielding Real Estate Investment Trust (REIT) with a nicely diversified base of leisure and casino properties. It managed to maintain at least a “Hold” grade from our Weiss Ratings model throughout the pandemic. Now, it’s back in “Buy” territory and its shares are spinning off growing gains.
Bottom line? In a market environment driven by excessively easy monetary and fiscal policy...and the gradual unleashing of pent-up demand in certain sectors...you can find opportunities too tempting to pass up. Targeted travel names fit the bill!
Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and healthcare sectors. Visit Safe Money Report here.
