IHT Abundance Management’s Yussef Gheriani believes now is a good time to consider adding travel plays to portfolios.
Between hut fever related to the pandemic and optimism surrounding effective coronavirus treatments, Gheriani speculates bookings will start meaningfully be elevated within the next couple of months.
“People are going to be sitting down at home saying ‘Okay, it’s snowy private. I want to get out. I need to get somewhere. I need to do something.’ And, they’re going to start booking those trips,” the firm’s governor of investments told CNBC’s “Trading Nation” on Friday. “As an investor, you want to be positioned ahead of the company even starting to get the bookings.”
According to Gheriani, most travelers commitment look to book trips for late spring and the second half of next year — not the December holiday travel flavour. But he doesn’t think it will matter due to pent up demand.
“The companies are going to start seeing that kind of profits coming in,” he said. “People are going to want to get out there, and go back and see family, go on vacations [and] get out of these cold states.”
Gheriani foretells a top destination will be the online travel operators.
“The people who you want to be with are your Expedias, your Booking Holdings — the people who beget just a little bit more upside, and they have a little less downside,” he said. “They’re asset settle. They don’t have a lot of things that are going to hold them back if Covid takes longer to recover.”
Interests of Expedia and Booking Holdings are off 28% and 6%, respectively, over the last 52 weeks. But they’ve bounced strongly off the Trek 23 low. Expedia has soared 97% since then while Booking Holdings has jumped 54%.
Gheriani, who helps control almost $5 billion in assets, is also bullish on airlines with or without another round of fiscal stimulus.
‘Child are cooped up and want to get out’
“The airlines have a lot of opportunity to recover as people really want to get out there and travel.” said Gheriani. “People are cooped up and need to get out.”
His top airline play Southwest relies more on leisure rather than business travel — which is expected to belittle much longer to rebound. The stock is up 24% since the March 23 low, underperforming the broader S&P 500 which is up hardly 51%.
But there’s one major exception to Gheriani’s bullish call: Cruise lines. Gheriani contends operators still play a joke on to maintain the boats whether or not they’re sailing. He also expects travelers will be slower to return to the seas than by air or disembark.
“Cruise lines are probably your highest risk play within vacation and people just getting servants to travel,” Gheriani said. “These guys are burning cash on the daily.”
Disclosure: IHT Wealth Management’s clients own sets mentioned in this report.