5 ETFs Set To Soar On Strong Memorial Day Travel Rebound

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Travel has rebounded strongly as more Americans are getting vaccinated, business and economy have reopened, and consumer confidence grows. In fact, a large number of Americans are gearing up for a busy summer travel season by road or air. Top destinations include Orlando and Las Vegas, according to both AAA Travel bookings and TripTik road trip searches.

According to travel service provider American Automobile Association (AAA), more than 37 million Americans will travel 50 miles (80 km) over the Memorial Day weekend (May 27-31), up 60% from last year's Memorial Day weekend when just 23 million had traveled, the lowest number on record since AAA began keeping track in 2000. Of them, 34 million will go on a road trip, 2.5 million will fly, and 0.2 million will travel by train and other modes (including buses and cruises).

However, the increase in travel is still 13% less than the last pre-pandemic Memorial Day holiday in 2019. Although road trip is expected to rise 52% over last year, motorists are expected to pay higher gas prices since 2014 this Memorial Day weekend. Gas price currently averaged $3.03 per gallon, up 17 cents from a month ago and $1.12 more expensive than one year ago.

AAA Travel data also showed recent increases in online traffic and bookings on AAA.com, particularly for hotels and car rentals, heading into the summer travel season.

Huge travel demand should boost revenues and profitability for transporters, including airlines and railroads, thereby leading to higher share prices. Investors shouldn’t miss this opportunity and could tap this trend through any of the ETFs that stand to profit big time from the upbeat Memorial Day weekend travel trend.

iShares Transportation Average ETF (IYT - Free Report)

The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. It is heavily concentrated on the top three firms with double-digit exposure each while other firms account for less than 8.8% share. From a sector perspective, railroads takes the top spot with 35% of the portfolio while air freight & logistics, trucking and airlines round off to the next three spots with double-digit exposure each. The fund has accumulated $2.1 billion in AUM while sees a solid trading volume of around 209,000 shares a day. It charges 42 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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