The upcoming holiday travel season would appear to be an opportune time to consider an exchange traded fund such as the ALPS Global Travel Beneficiaries ETF (NYSEARCA: JRNY), but investors might not want wait much longer because some JRNY components are already surging.
JRNY, which debuted in September, tracks the S-Network Global Travel Index, which is a basket of airlines, hotels, casinos, and cruise lines, as well as companies that support travel activities, luxury retailers, and purveyors of leisure activities.
While it’s not quite two months old, investors shouldn’t hold that against JRNY because it appears that the reopening travel trade, which the ETF is levered to, is on in a big way while the stay-at-home trade is fading.
“Airlines stocks are rallying alongside online booking sites, ride-hailing companies and Airbnb, after earnings reports showed clear signs of a recovery in travel. At the same time, stay-at-home stocks are sagging as borders reopen and health experts indicate that an end to the Covid-19 pandemic could come sooner than expected,” reports Samantha Subin for CNBC.
Airbnb accounts for 3.77% of JRNY’s weight and is a top 10 holding in the new ETF. As for vibrancy among airline stocks, JRNY has more-than-adequate leverage to that trend, as nearly 20 of its holdings are airlines or airport operators.
“Airlines are finally back. Delta had its best week in about a year, climbing 13%, as the U.S. prepares to lift international travel bans. American Airlines jumped 14% and Southwest Airlines rose more than 10% for the week,” according to CNBC.
Those three domestic carriers are all members of JRNY’s roster. Another source of strength for JRNY is casino operators, particularly those with Las Vegas exposure and regional portfolios. Broadly speaking, third-quarter earnings from domestically focused gaming companies are proving strong, and there could be more room for upside as mask mandates in Nevada loosen.
Another catalyst for casino equities in 2022 could be the resumption of a steadier stream of convention business, which is pivotal to the fortunes of operators on the Las Vegas Strip. That business has been slow to return due to the coronavirus pandemic, but as vaccination rates increase and mask mandates wear off, business meetings and conferences could return.
Add to that, JRNY holding Caesars Entertainment (NASDAQ:CZR) has been mentioned as a possible Fed tapering play. Six JRNY holdings are casino operators.
Other travel and leisure ETFs include the VanEck Vectors Gaming ETF (BJK) and the U.S. Global Jets ETF (JETS).
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
