In an economy that’s on the mend and where many people are still out of work, few thought the travel and leisure industry would deliver earnings upside surprises this season. But companies as varied as cruise liners to hotels to online agents have blown away Wall Street’s expectations.
These top beats will be a key theme this week on Mad Money, as Cramer highlights the best of the best from April. He dug deep into each report to find out what drove this outperformance, and now he’s ready to recommend some stocks to watch. Travel and leisure held two strong picks, he said, one trade and another longer-term investment.
But first some numbers: Royal Caribbean eked out a penny a share in earnings for its most recent quarter, besting the Street’s anticipated loss of 5 cents. On top of that, the company revenues climb 12% versus the year before, booking volumes increased 20% so far in 2010 and net cruise costs per average passenger cruise were down 2.2%, all better than expected. If it weren’t for the rising number of cruise ships entering the market, Cramer said he’d recommend RCL, which is up well over 100% since he first recommended it on May 11, 2009.
Travelzoo , which helps travelers find deals discounts and package deals on hotels, flights, cruises and other vacation offers, beat the Street as well. The company reported earnings per share of 15 cents, or 8 cents more than analysts were looking for, on revenues that were up 24% year-over-year – another metric that caught investors by surprise.
The biggest beat, though, came from Starwood Hotels, which delivered 11 cents more than the 2-cents-a-share consensus estimate. What was behind the great numbers? Rebounding corporate travel, for one. But Asia also made a big contribution to this earnings beat. Also, management on the conference call issued strong guidance for both the second quarter and the full year. Cramer went one further, saying he sees years of growth ahead for this company, and he’s bullish on the stock for this year and 2011.
There’s a potential trade among the hotels as well. Hyatt reports this Thursday, and Cramer thinks it could be huge. They beat last quarter, which sent the stock flying 4.3% on a day when the S&P 500 was down 0.2%.
The sector’s performance was so strong, in fact, that Cramer ranked it among the top beats of April. All week he’ll look at the industries that blew away Wall Street’s expectations and highlight the best stocks in each one.
“It could happen again,” Cramer said. “We like this stock very much for the speculation.”
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