Trade Radar | How to Invest in the Booming Tourism Industries Amid the Strong US Economy and China's Promising Recovery?
Another Weekly Session with Loui, M+ Online Head of Research.
Story Highlight: US Q2 GDP grew at 2.4% due to the resumption of business activities after the Covid-19 pandemic and despite weak growth in China, demand is expected to recover at a measured pace in H2 2023. So, the Cruise-Airline-Shopping-Hotel (C-A-S-H) industries are on the road to recovery.
Let's take a brief look!
US GDP grew at 2.4%. It is clear that with the resumption of business activities after Covid-19 pandemic, most of the economies have stabilized and managed to grow into positive territory. Even at the elevated interest rate environment in the US, the 2Q US GDP expanded at a pace of 2.4% on the back of healthy consumer spending.
Slowly, but surely… Despite the China borders having only reopened early 2023, the growth was not as strong as anticipated, but we believe there will be demand recovery at a measured pace into 2H2023.
…as China pledges for more measures. The number of pledges recently to revive the economy’s recovery by Beijing will be able to improve the business environment and translate to higher spending going forward. “China's State Council on Monday issued measures to restore and expand consumption in the automobile, real estate and services sector, aiming to give full play to the "fundamental role" of consumption in economic development.” (Reuters)
Cruise-Airline-Shopping-Hotel (C-A-S-H) are on the recovery. Based on the recovery from China as well as the economic data from the US, we noticed that most of the tourism industries are gaining momentum.
Royal Caribbean Group ( $Royal Caribbean Cruises Ltd. RCL$ ) gaining traction in sales. Jason Liberty, the president and CEO of Royal Caribbean Group has indicated that the company continues to fire on all cylinders, resulting in record yields and the second quarter earnings significantly exceeding the expectations, while the demand for cruising is exceptionally strong and he has seen another step change in booking volumes and pricing, leading to expecting double-digit net yield growth for the full year.
Delta Air Lines ( $Delta Air Lines, Inc. DAL$ ) delivered the highest quarterly revenue and profitability in its history. Ed Bastian, Delta's CEO commented in the recent quarterly result, suggesting that consumer demand for air travel remains robust. Against this constructive backdrop, Delta is increasing the 2023 earnings guidance from $6 to $7 per share and reiterating the updated outlook for $3 billion of free cash flow.
Miniso Holdings( $MINISO Group Holding Limited MNSO$ moved beyond the pandemic. Mr. Guofu Ye, Founder, Chairman, and CEO of MINISO, commented, "We delivered a strong start to calendar year 2023 with the best March quarter performance in our history, shaking off three years of uncertainty caused by pandemic. We are pleased to see our domestic operations delivered a well-rounded and encouraging quarterly performance, while our overseas operations also moved further along its path of recovery.”
Wyndham Hotel ( $Wyndham Hotels & Resorts Inc WH$ )continues to recover. According to Geoff Ballotti, president and CEO of Wyndham, it has celebrated the tremendous progress with another quarter of solid results including global RevPAR growth of 7%, net room growth of 4% and the 12th consecutive quarter of sequential growth in the development pipeline, which has never been stronger.”
Based on the respective C-A-S-H companies, they are somewhat recovering with optimistic guidance. Hence, it gives us confidence that the recovery remains intact and could translate to more upside potential on the share prices.
Let’s surf with the C-A-S-H in the journey of recovery. You may trade them via the M+ Global App.
| Stock Code |
Company Name |
Last Closing (USD) |
Market Cap (USD 'bn) |
1-Mo Return (%) |
| Cruise | ||||
| RCL | $Royal Caribbean Cruises Ltd. RCL$ | 107.44 |
27.523 |
5.2 |
| NCLH | $Norwegian Cruise Line Holdings Ltd. NCLH$ | 19.41 |
8.233 |
1.4 |
| CCL | $Norwegian Cruise Line Holdings Ltd. NCLH$ | 17.99 |
22.437 |
0.1 |
| Airline |
|
|
|
|
| DAL | $Delta Air Lines, Inc. DAL$ | 45.4 |
29.211 |
-2.5 |
| LUV | $Southwest Airlines Co. LUV$ | 33.43 |
19.912 |
-5.7 |
| AAL | $American Airlines Group, Inc. AAL$ | 16.23 |
10.604 |
-6.6 |
| Shopping |
|
|
|
|
| MNSO | $MINISO Group Holding Limited MNSO$ | 20.97 |
6.625 |
23.7 |
| SBUX | $Starbucks Corporation SBUX$ | 101.26 |
115.983 |
2.5 |
| TJX | $TJX Companies, Inc. TJX$ | 86.37 |
99.26 |
2.1 |
| Hotel |
|
|
|
|
| MAR | $Marriott International, Inc. Class A MAR$ | 204.74 |
61.062 |
9.9 |
| WH | $Wyndham Hotels & Resorts Inc WH$ | 77.76 |
6.552 |
13.6 |
| HLT | $Hilton Worldwide Holdings, Inc. HLT$ | 154.57 |
40.422 |
6.8 |
More about Loui:
Loui Low leads a team of analysts to perform equity and economic research and to provide investment advisory services to the organization's sales team, fund manager and retail fraternity. He has more than 10 years of experience in the stockbroking industry.
He graduated with a Bachelor of Science in Statistics from University of Malaya. He also holds an STA Diploma and is a member of the Society of Technical Analysts (MSTA) United Kingdom.
More about the Trade Radar:
Trade Radar is a weekly-updated section, featuring Loui's latest insights into market trends and hot topics. Traders may find some trading inspiration from Loui's views.
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