| Written by Thomas Hughes 
Results from Delta Airlines (NYSE: DAL) to Booking.com (NASDAQ: BKNG) have put the bid back into travel and leisure stocks. Recently launched travel and leisure ETFs like Defiance Hotel, Airline and Cruise ETF (NYSEARCA: CRUZ) and ALPs Fund Services Global Travel Beneficiaries ETF (NYSE: JRNY) are up about 30% off of their 2022 lows and heading higher if the analysts have anything to do with it. The analysts are upgrading their favorite names in the hospitality sector and today’s list includes 3 hotels.
These hotels represent the largest and most recognizable chains on the planet and are well-positioned in more ways than one. Not only do they command the bulk of the world's available hotel and motel bed space, but the same can be said of investable dollars earmarked for this sector. According to the American Hotels & Lodging Association US hotel traffic is expected to exceed pre-pandemic levels. This will be compounded by higher prices and larger networks for most big chains.
Hilton Worldwide Holdings Is Trending Higher
Hilton Worldwide Holdings (NYSE: HLT) confirmed its uptrend following the latest earnings report. The company beat on the top and bottom lines while offering favorable guidance due to strength in the travel market. The company cited growth across all segments and opportunities for additional growth due to ongoing consolidation within the industry. Opportunities include acquisitions and the expansion of portfolio brands, including the latest addition, Spark by Hilton.
The results sparked several analyst updates that have the consensus price target edging higher after a year of edging lower. The takeaway is that analyst sentiment in this stock has held relatively steady over the past year despite economic uncertainties, and there is a potential catalyst in the data. The price target is edging higher, but the stock has not had an upgrade to sentiment since September.
There have been 2 downgrades contrary to the outlook, the results, and the price target trend. They have set the stock up for upgrades assuming business momentum carries into the spring and summer as expected. As it is, the consensus price target is only a few points above the price action and may keep the stock from moving much higher in the near term.
Marriot International Led Higher By The Analysts
The consensus sentiment toward Marriot International (NASD: MAR) is as tepid as with Hilton, but the price target trend is much hotter. The consensus is near $180 or about 5% above the price action compared to only 3.25%, but there is more. This price target is trending higher versus last month, last quarter, and last year, which could get it up to a new high. The price action suggests this market is gearing up for such a move and it could begin at any time. The last 7 analysts' actions are price target upgrades with 6 targets above the consensus and 1 in line. The institutional activity is also favorable with the sell-side accumulating over the past few quarters. If these trends continue, a new high is all but assured.
Plays Hotels And Resorts Is The Top Pick
Playa Hotels and Resorts (NASDAQ: PLYA) is a smaller operator focusing on beachfront properties in Mexico and the Caribbean. The company’s Q4 results prove its properties are in demand, the guidance is favorable, and the analysts have it pegged at a Buy. This is based on only 4 analysts, but the firms involved include Oppenheimer, Citigroup, Truist, and Deutsche Bank so carry more weight than some. The salient point is the Deutsche Bank just raised its price target to $15, setting the high-price mark. This target is almost double the stock price and well above the consensus target, suggesting that a 35% of upside is possible.
The price action is favorable as well. The market has the price near resistance at the pre-pandemic levels and is on the way to setting new highs. If resistance near $9.50 is broken, this stock could quickly rise to the $12 consensus target or higher.
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| Written by Chris Markoch 
Cruise line stocks have risen sharply since the onset of the pandemic. Royal Caribbean Group (NYSE: RCL) stock is up 294%. Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is up 188%. And Carnival Cruise Lines (NYSE: CCL) is up 124%. And recent analysts' opinions suggest these stocks may have further to run. That may make cruise line stocks attractive to traders. But now is a time for investors to exercise caution.
Several headwinds still need to subside before it is clear sailing for the cruise line industry. Specifically, these obstacles are debt, pricing power, and the lingering threat of a recession in the country.
Cruising is Still Popular
Imagine that. At the onset of the Covid-19 pandemic, some analysts believed a global pandemic and the uncertainty brought by an airborne virus would squelch the appetite for cruising. That hasn’t been the case.
Cruise line bookings were strong in 2022 and continue to show momentum in 2023. Some of this was expected. There is a loyal base of cruise enthusiasts that will always return to the sea.
And the pandemic has made all the cruise lines rethink the way things had always been done to create a more contactless environment in an environment where socializing is the name of the game. This has brought back some reluctant travelers. And a survey of 2,200 adults by the research firm Morning Consult finds that trust in cruise lines is up.
Deep Discounts are Going Away, But Will Demand Stay Strong
Another factor that lured travelers back to cruises was deep discounts. Taking a cruise has always been considered a value compared to other vacation options. But that was even more the case as cruise lines had to use discounts to lure back customers.
It’s working. But at what cost? Every cruise line was forced to take on significant debt to manage through the pandemic. Now that ships are back at sea, the focus is shifting toward becoming profitable.
That’s where things get cloudy. Some travelers find that the cost of a flight to take them to where they’re sailing from is more than the cruise itself. And it’s unlikely that airfare will come down anytime soon. But where airlines have been able to pass along costs, it’s less clear if cruise lines can do that.
Debt Remains a Big Weight on Earnings
The good news is that many of the major cruise lines are projecting profitability in 2023. The bad news is that it appears that a good bit of that is already priced in.
For example, Royal Caribbean is projecting positive earnings per share of $4.84 in 2023. That’s encouraging after several years of losses. However, that’s also roughly equivalent to half of the full-year EPS the company generated in 2019 ($9.54).
And that’s the fundamental issue. At the end of 2019, RCL stock traded for approximately $133 a share. As of this writing, it’s trading at around $70 per share. You could make the case that Royal Caribbean may have been trading at a discount to the S&P 500 then. But it’s trading at a premium now.
And look at the capital structure of Carnival now as opposed to at the end of 2019. The number of outstanding shares has grown from 684 million to approximately 1.1 billion as of February 27, 2023. That’s a lot of dilution for investors to digest. And the company’s total net debt is up almost three times at $31.7 billion.
Recession Fears Loom
Revenge travel continues to be going strong. While there’s logic to the fact that consumers were shifting from buying stuff to buying experiences, that doesn’t explain the elasticity of this demand. Economic data shows that consumers have tapped their credit cards, and savings rates are starting to tick. None of that suggests an appetite for travel.
One theory starting to take root is that many recently unemployed tech employees take time off before they take their next job. If so, you would expect that demand for travel will soften heading into the back half of the year.
Don’t Fall Into a Value Trap
At a time when value is hard to find, it can be tempting to look at cruise line stocks with starry eyes. Despite their gains since the pandemic, these companies are not in the same fiscal shape they were in 2019. That’s not the fault of the companies. It doesn’t mean that they are as attractive as they may seem.
While cruise line stocks are not as speculative as the meme stocks of 2021, they still belong only in that part of a portfolio geared towards risk-on assets. And that should only be 5%-10% of your total portfolio. Royal Caribbean looks like the best of the bunch, but that’s a weak vote of confidence.
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| Written by Keala Milles 
Plant-based meat alternatives are growing in popularity, and that could make them a solid long-term investment as well. This is particularly true for the many new publicly-traded vegan food companies today. As reported in a story last week, Beyond Meat Inc. (NASDAQ: BYND) shares jumped more than 10% after the company posted smaller-than-expected losses for the recent quarter. And many emerging peers and enduring competitors are now looking to see similar promises down the road.
Oatly
With a barely a year-old IPO, Oatly Group AB (NASDAQ: OTLY) has already helped make oat milk the second-best-selling alternative after almond milk. Oatly has been developing oat-based dairy alternatives like milk, yogurt, spreads and ice cream for 30 years. These developments have led to a 1.26 billion market cap, competing with Beyond.
Oatly is also similar to Beyond in that it has yet to be profitable. Earnings to grow as revenue shot up to $643.2 million in 2021, an increase of more than 52%. Although Oatly earnings have not yet gone green, the company may recover the 68% loss value on the year.
Its $6.94 price target is not only affordable, but it also represents a notable 225.7% upside. In addition, the stock has already started a rebound, having climbed at least 35% over the last quarter. The overall oat milk market grew from $2.76 billion to $3.05 billion last year. Last year, the alternative-dairy market was worth at least $35 billion and should reach $123 billion by 2030. That means there is much room for even more growth for Oatly stock, likely contributing to Oatly's "moderate buy" rating.
Tattooed Chef
The only plant-based frozen food company on this list, Tattoed Chef Inc. (NASDAQ: TTCF), specializes in ready-to-cook plant-based meals and ready-to-eat foods. The company went public in late 2020 through a special purpose acquisition company (SPAC), which indicates encouraging interest in the budding firm. That SPAC helped bring TTCF to an impressive market cap of $121.3 million.
In 2021, TTCF revenue jumped nearly 44% to $213.4 million. While Tattooed Chef's products are now available in approximately 4,300 retail locations, 90% of sales come from the top three grocery companies. Unfortunately, this hints at high customer concentration risk and low growth potential if it can't find new retail clients.
At $1.36 a share right now, TTCF is among the cheapest stock in its sector. With a 342.1% upside, it has the most promise. Still, analysts have given the stock a "hold" rating, which could result from earnings not yet in the green (but growing). Also, Tattooed Chef stock is down more than 88% since last year and its recent incremental growth is nothing to get excited about.
Local Bounti
Founded in 2018, Local Bounti Corporation (NYSE: LOCL) grows lettuce and herbs through a patented technology called "stack and flow." This innovative vertical farming technique is significantly more environmentally sustainable than traditional farming, using 90% less water and occupying 90% less land while increasing harvest efficiency.
While the company has minimal revenue, its November 2020 SPAC suggests greater investment confidence than the average IPO. At 75 cents, LOCL is a true penny stock with potential. This specifically includes a 281.95% upside and earnings on the rise. However, earnings per share won't be in the green until late in the year, and Local Bounti stock remains down nearly 88% over the last 12 months. Consider heeding the "hold" rating, at least for now.
AppHarvest
While it may not be the most widely-spoken name in the plant-based meat industry, AppHarvest (NASDAQ: APPH) is among the best-regarded agriculture stocks. With a $108 million market capitalization, it is certainly not small, but its inventory is currently limited to tomatoes. However, it plans to expand, which should help the company accomplish its financial goals.
Another of these goals is to continue revenue growth. For example, while 2022 revenue was between $24 and $32 million, the company projects pre-EBITDA revenue that could touch $450 million by 2025. On top of that, analysts anticipate the $2.75 price target represents a 281.9% upside, which could help turn things around since the AppHarvest stock has been in decline for at least the last quarter and down nearly 88% since last year. Read This Story Online |  Every morning before the market opens, a scanner called Oracle runs through 15,000 stocks and scores the setups — so there's already a plan in place by 6:15 a.m.
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