The current quarter is generally a great one for tourism stocks within the U.S.
School is getting started so some families will feel the need to take a vacation before it is too late. This would lead one to believe that tourism stocks would be booming. Unfortunately, this may not be the case. Several risks have entered the picture, and they have managed to keep the prices of such stocks stagnant.
Investors are worried about the future and the potential for Zika within the U.S. Of course, not all travel-related stocks have been hit hard. Some managed to ride out the storm and flourished.
Over the past few years, Priceline Group (PCLN, Financial) has managed to soar to new heights. The stock remains at record levels and is ahead of Amazon (AMZN, Financial) and other major market movers.
Of course, this wasn’t always the case. In 2003, Priceline Group was considered to be dead in the water. The company decided to initiate a one-for-six reverse split. Before the split, the stock price was right around $22 per share. After the split was carried out and even to this day, the stock has remained within the $1,400 range, which is simply astonishing.
Since then, Priceline has flourished and has even gone on to buy OpenTable. The sky is the limit and the company remained profitable despite some tourist-related scares.
Recently, Disney (DIS, Financial) has been hit hard by several things. First and foremost, one of the company’s theme parks is located in Florida, which has been the site of a Zika outbreak. Many experts believe that consumers will avoid the Florida area over the next several months, and this could lead to a downturn for Disney’s theme park.
Another problem is the recent death of a young boy at the Florida park. This has resulted in many would-be Florida tourists trying to book flights to other American destination hotspots. Since the beginning of the year, Disney’s stock has fallen from around $120 to $95.
Nonetheless, the company’s substantial dividend has kept the stock from sinking lower, and some see the situation as a good opportunity to initiate a buy.
Meanwhile, one of the biggest airlines in the world, Delta (DAL, Financial), has decided to make big changes to its pay scale. The company decided to offer its pilots a pay increase of 27% over the next four years.
The company has been in a battle with its pilots over salary disputes for quite some time, and it may very well hurt the company in the long run. In early 2016, Republic Airways was forced to enter into bankruptcy due to a similar dispute.
Delta seems to be more than willing to cater to its pilots and should definitely learn a lesson from Republic Airways’ previous failings. Will the company come out fine and how will the pay increase impact the company’s bottom line? These are all questions that investors will need to ask themselves before buying Delta’s stock.
Disclosure: I do not own any shares or any stocks mentioned in this article.
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