Consumer worldwide have been suppressed in their wishes to travel, especially after the mainstream media accused the U.S. economy of flirting close to a recession throughout 2023. Well, now that the new year is here, it is evident that the hypothetical recession has been canceled, but more on why the economy is heating up later.

If you understand that traveling will soon begin to pick up like never before, sponsored by proposed interest rate cuts by the FED. In that case, there will be a gold rush in the space. However, not all stocks are created equal in this industry; you should avoid buying the gold and instead buy the shovels to be sold to everyone else chasing the hype of the breakout.

For now, these ‘shovel’ stocks can be found in names like TripAdvisor NASDAQ: TRIP and airline stocks, but you aren’t here for the average plays, are you? Save your notes for Booking NASDAQ: BKNG as it is the best value play in the sector today; it has even seen recent analyst upgrades and attracted a special guest to invest in it, but more on that in just a bit.

Didn’t see that coming

According to the FedWatch tool at the CME Group NASDAQ: CME, traders are pricing in that the FED will likely cut rates by May or June of this year.

Markets will not sit around and wait to move their capital when and if that time comes, so they are probably starting to make a move ahead of time, maybe even today.

This could be why one of the most closely followed indicators in the economy, the employment situation report (better known as the NFP), has seen increasing trends in jobs created each month. In fact, for December, the report read 216 thousand jobs added, followed by 353 thousand jobs in January (that’s a 63.4% jump!).

If you are a business owner or manager, why would you start to hire more personnel? It surely isn’t because you expect a recession to come your way; in fact, you probably expect just the opposite. These hiring sprees give way to the expectations of managers across the economy who see booming business ahead.

At the same time, you see guys like Carl Icahn (famous activist investor) landing his newest interest into JetBlue Airways NASDAQ: JBLU not only from a value perspective but from the viewpoint of a coming activity breakout in the coming months. But he is not the only mega investor tagging along on the trend.

Michael Burry, the guy who called the 2008 financial crisis, found the value to be had in Booking stock, as he has placed up to 4.7% of his entire fund into the stock. Understanding that this is the high-margin middle-man of the travel industry, he knows that Booking is likely first in line to collect profits.

Hopefully, by now, you understand how more employment, along with the expectations of cheaper rates and easier financing down the line, will enable the consumer to resume their travel plans for this year. A trend found in the Consumer Discretionary Select Sector SPDR Fund NYSEARCA: XLY price action.

Icahn has decided to go straight for the airlines, and Burry went for the technology stocks by picking Booking, but is he right?

Why Booking?

Of course, dozens of stocks stand to compete against Booking in the way that they provide a platform that makes traveling more accessible for the everyday consumer. For reasons that will become clear in just a second, analysts and markets have left you with enough evidence to see how this stock is head and shoulders above the industry.

Starting with the financials, this stock generates an average ROIC (return on invested capital) rate of roughly 18.0%, a five-year average. In true value investing fashion, Burry knows this stock is a good candidate for compounding his investment over time.

This rate compares to TripAdvisor’s average rate of 3.0%; from a financial standpoint, it would be disqualified as a business that cannot beat inflation. Markets know this, and so do analysts; here is how they are letting you know.

Analysts are projecting earnings per share for Booking to grow by 19.6% over the next twelve months, significantly above TripAdvisor’s analyst projections for only 6.5% advances for this year. This is not the only way they see the widening gap between the two names today.

With a recent bump, analysts at the UBS Group NYSE: UBS see Booking stock going as high as their price target of $4,200. This view directly implies an upside of 17.3% from today’s prices. They are contrasting that to TripAdvisor’s $21.6 a share price target that calls for a 19.3% downside from where the stock trades today.

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