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Beach Stocks Soar

INVESTINGBeach Stocks Soar
  • Global and European beach stock baskets returned 46% and 24% respectively last year compared to 7% for global stocks.
  • The best performances were by the cruise company Royal Caribbean (84%) and Delta Airlines (54%).
  • eToro’s analysis focused on the recent performance of so-called “beach stocks” – bookings, entertainment, airlines, cruises, and hotels.

As summer approaches and the travel and tourism industry recovers, an analysis by the trading and investment platform eToro shows that “beach stocks” are soaring, returning six times more than global stocks over the past year.

eToro created two “beach baskets” consisting of 15 equally weighted stocks each, covering companies in the booking, entertainment, airline, cruise, and hotel industries. One basket was for global industry leaders, and the other for companies focused on Europe. Both outperformed global markets last year. While the global basket gained 46% over the past 12 months, even surpassing the high-flying NASDAQ-100 (+37%), the European basket returned 24%, compared to just a 7% rise in global stocks over the same period.

Ben Laidler, Global Markets Strategist at eToro, explained: Beach stocks have performed remarkably well over the past year, driven by strong growth in the travel and hospitality sectors. Air traffic saw a huge 37% increase last year, fueled by international travel. Hotel bookings also surged by 80%, and the cruise industry saw a 50% rebound in passenger numbers, surpassing pre-pandemic levels from 2019.

After three consecutive years of impressive 20% growth, the travel industry is now poised for further advancements, exceeding its pre-pandemic peaks, as it aims to catch up with the global economy, which will be 25% larger this year compared to 2019.

Among the top performers in the global basket were Royal Caribbean, which rose 84%, followed by Delta Airlines (54%) and Carnival Cruises (43%). Meanwhile, American Airlines’ stock price remained unchanged over the past year, while Walt Disney saw a modest 4% increase.

In Europe, Melia Hotels stood out with a 31% rise, followed closely by travel agency EDreams (27%) and Accor Hotels (24%). On the other hand, Lindblad Expeditions experienced a significant drop of -33%, while gaming group Evolution and travel technology company Amadeus saw more moderate declines of -4% and -2% respectively.

Beach Stock Baskets (bookings, entertainment, airlines, cruises, and hotels)
Global YTD European YTD
Booking 43% Edreams 27%
Expedia 21% Booking 43%
Airbnb 16% Amadeus -2%
Walt Disney 4% Flutter Entertainment 1%
Live Nation 25% Evolution -4%
Las Vegas Sands -26% Fluidra 39%
Delta Air Lines 54% IAG 17%
Ryanair 20% Aena 17%
American Airlines 0% Ryanair 20%
Marriott 33% Melia Hotels 31%
Intercontinental Hotels 42% Accor Hotels 24%
Hilton 40% NH Hotels 17%
Carnival Cruises 43% Carnival Cruises 43%
Royal Caribbean 84% Tui 3%
Norwegian Cruise Lines 15% Lindblad Expeditions -33%
Total: 46% Total: 24%

Past performance is not indicative of future results.

The travel and tourism industry confounds skeptics, enjoying a “new normal” of strong demand and pricing power. Volumes have recovered to pre-pandemic levels but currently lag behind the global economy, which is a quarter larger. At the same time, limited new capacity keeps pricing power high – summarizes Ben Laidler.

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