BVH - 2 Top Travel Stocks to Buy for Summer 2021

The COVID-19 pandemic took a toll on the travel industry last year—and it may well be one of the last industries to recover. But thanks to a speedy economic recovery and significant progress on the vaccination front worldwide, a resumption of vacation is well on its way.

According to a recent U.S. Travel Association monthly travel data report, nine of ten Americans plan to travel in the next six months. Although business travel remains a long way short of normal, there has been a substantial uptick in leisure travel. In fact, this summer should see increased domestic and international travel, with more countries opening their borders and more families eager to make their first trip since the onset of the pandemic.

Pent-up demand for travel this summer should benefit leading travel companies Bluegreen Vacation Holdings Corporations (BVH) and Choice Hotels International, Inc. (CHH). So, we think their shares are solid picks now.

Bluegreen Vacations Holding Corporation (BVH)

BVH is a vacation ownership company that markets and sells vacation ownership interests (VOI). In addition, the firm offers resort management, mortgage servicing, title services, reservations, and building design and development services, as well as financing to eligible VOI buyers and management services to vacation clubs and homeowners' associations.

Last month, Boca Raton, Fla.-based BVH announced that it has bought roughly 7% of Bluegreen's outstanding shares of the common stock, making Bluegreen a wholly owned indirect subsidiary of the company. The merger could diversify BVH’s portfolio and strengthen its business prospects.

In April, BVH announced that its resorts across the United States had received the Ecolab Science Certified seal, acknowledging its commitment to employing cutting-edge technology and processes to offer a clean and healthy environment for its owners and visitors. This acknowledgement should  aid BVH in establishing a stronger  brand image among the consumers and further boost its revenue.

During the first quarter, ended March 31, 2021, BVH's adjusted EBITDA increased 337.9% year-over-year to $16.05 million, while its net income came in at $2.97 million for this period, compared to a $28.31 million net loss  in the first quarter of 2020. The company’s EPS came in at $0.15, compared to a $1.55 loss per share  in the prior-year period.

A $1.44  consensus EPS estimate  for its fiscal year 2022 represents a 35.8% improvement year-over-year. The $674.3 million consensus revenue estimate for the current year represents a 29.8% increase from the same period last year. The stock has gained 50.9% over the past year and 34.9% over the past nine months.

BVH's POWR Ratings reflect this promising outlook. The company has an overall A  rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

BVH is also rated an A grade for Sentiment, and a B grade for Value and Momentum. Within the Travel-Hotels/Resorts industry, it is ranked #1 of 19 stocks.

To see additional POWR Ratings for Quality, Growth, and Stability for BVH, click here.

Choice Hotels Internationals, Inc. (CHH)

CHH in Rockville, Md., is a hotel franchisor that operates through various segments, including Hotel Franchising and Corporate & Other. For local franchise operations, it employs direct franchising partnerships, while for foreign franchise operations, it uses direct and master franchising agreements.

This month, Chief Learning Officer Magazine's LearningElite Program named CHH as a top business for global learning and development. In addition, the firm was also recognized for its exceptional learning efforts and superior property-level training resource in the Editor's Choice "Best Small Company" category. This should  allow CHH to capitalize on its brand identity more and accelerate its growth.

CHH reported $182.95 million in revenue in the first quarter, ended March 31, 2021. Its operating expense declined 18.9% year-over-year to $138.95 million. Its operating income was $43.99 million, while it reported $22.34 million in net income. The company’s EPS came in at $0.40 over this period.

The company's EPS is expected to grow 54.5% year-over-year to $3.43 in the current year. Analysts expect CHH's revenue to increase 31% year-over-year to $1.01 billion in fiscal 2021. CHH's stock has gained 54.5% over the past year and 32.9% over the past nine months.

CHH’s POWR Ratings reflect this promising outlook. The stock has a B Grade for Growth, Momentum, and Quality. In the same industry, it is ranked #2 of 19 stocks.

In addition to the POWR Ratings grades I have just highlighted, you can see the CHH ratings for Value, Stability, and Sentiment here.

BVH shares were trading at $17.40 per share on Wednesday afternoon, up $0.66 (+3.94%). Year-to-date, BVH has gained 28.60%, versus a 15.23% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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