It’s almost time to turn the calendar to 2021, and many of us are looking forward to doing everything we couldn’t do in 2020. One market segment that could bounce back in a big way next year is the travel sector.
Families that have been cooped up for months will be looking for a change of scenery. Businesses will be looking to close deals in person. Folks who love to travel have been making plans.
Which names in the travel space are setting up for a strong year in 2021? To find the answer, we divided the sector into subgroups. Here’s what we found:
Technically speaking, this is one of the strongest groups within the sector. My top pick in this space is Expedia (EXPE) – Get Report.
At the time of this writing, Expedia was nearing its year-to-date high. The stock was on the verge of a breakout from bullish pennant formation (black lines in the chart below). That consolidation pattern projects Expedia to the $160 area.
The runner-up in this subset is Booking Holdings (BKNG) – Get Report, operator of Priceline.com and several other popular travel websites. Booking Holdings has formed a pattern similar to Expedia (see below). Based on that pattern, the stock could climb to $2,500 per share.
Honorable mentions in this space include Sabre Corp. (SABR) – Get Report and Travelzoo (TZOO) – Get Report.
Hotel stocks would seem to have a lot of upside, but investors have been lukewarm to this group. None of the major brands has reached its pre-Covid-19 highs, but two names are getting close.
Choice Hotels (CHH) – Get Report closed at an all-time high of $108 in February. Then, the stock was halved during the ensuing Covid-19 downdraft. However, by November, Choice Hotels had climbed back above $100.
Choice has formed a large ascending triangle pattern (see chart below). If the stock can break above $108, it could cruise all the way to $140.
The chart of InterContinental Hotels Group (IHG) – Get Report, below, has a similar look. Based on its pattern, IHG appears to be headed to $85.
Honorable mentions: Hilton Worldwide Holdings (HLT) – Get Report and Marriott International (MAR) – Get Report.
There is little good news to report in this sector. The best airline chart belongs to JetBlue (JBLU) – Get Report, shown below. This stock has formed a rounded bottom pattern (semicircle), and recently closed at its highest level since the pandemic hit.
That said, JetBlue doesn’t have a great chart. There’s no increase in volume behind the stock’s attempted breakout (shaded yellow). This tells us that JetBlue’s attempted breakout is likely to fizzle.
Like JetBlue, none of the major air carriers is near its pre-Covid-19 highs. The chart of American Airlines (AAL) – Get Report is typical of this group.
Despite a bull market, American has been stuck on the tarmac for the past six months. Unlike JetBlue, American has failed to challenge its June high (point A in the chart below).
I like Expedia and Booking Holdings at their current levels. Choice Hotels is a buy above $108, and InterContinental Hotels Group is a buy above $66. JetBlue is the only airline I’d consider buying right now.
Ed Ponsi is a regular contributor to Real Money Pro, TheStreet’s sister site for active stock traders. Click here to learn more and get great columns, commentary and trade ideas from Tim Collins, Mark Sebastian, Paul Price, Doug Kass, and others.
At the time of publication, Ponsi was long EXPE and BKNG.