5 ETFs Set To Soar On Strong Memorial Day Travel Rebound

Image: Bigstock

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.

SPDR S&P Transportation ETF (XTN - Free Report)

This fund tracks the S&P Transportation Select Industry Index, holding 41 stocks in its basket with none holding more than 3.5% of assets. About 32.4% of the portfolio is dominated by trucking, while airfreight & logistics, and airlines round off the next spots with 24.5% and 24.2%, respectively. With AUM of $698.5 million, the fund charges 35 bps in fees per year from investors and trades in a volume of around 140,000 shares a day. XTN has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

First Trust Nasdaq Transportation ETF (FTXR - Free Report)

This fund offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value, and growth by tracking the Nasdaq US Smart Transportation Index. Each firm holds less than 9.8% share in the basket. From an industrial look, trucking takes the largest share at 18.9% while railroads and transport services round off the next spots with double-digit exposure each. FTXR has accumulated $1.1 billion in its asset base and charges 60 bps in annual fees. The average trading volume is good at 114,000 shares. The ETF has a Zacks ETF Rank #2.

U.S. Global Jets ETF (JETS - Free Report)

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 41 securities that are heavily concentrated on the top four firms with a double-digit allocation each. Other firms hold no more than 4.2% share. The fund has gathered $3.8 billion in its asset base and sees a heavy trading volume of 4.7 million shares a day. It charges investors 60 bps in annual fees and has a Zacks ETF Rank #2 with a High risk outlook.

ETFMG Travel Tech ETF (AWAY - Free Report)

This is the first ETF that offers direct access to the technology-focused global travel and tourism industry. It follows the Prime Travel Technology Index, charging investors 75 bps in annual fees. The fund holds 31 stocks in its basket with travel bookings & reservations companies accounting for 51.9% of assets, followed by 18.5% in travel advice companies and 16.3% share in travel price comparison firms. AWAY has accumulated $344.7 million in its asset base and trades in an average daily volume of 268,000 shares.

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 ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.