Top 3 Stocks in Leisure, Hospitality as GDP Exceeds Expectations
These select airline and hotel stocks could perform well in 2025 as the country's economic outlook "is pretty bright."
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On Wednesday, Fed Chairman Jerome Powell noted that the U.S. economy had avoided a recession.
“The outlook is pretty bright for our economy,” said Powell.
On Thursday, this sentiment was reinforced by a strong GDP report. The U.S. economy expanded at 3.1% in the third quarter, considerably faster than the 2.8% projection.
With the economic picture brightening, it seems reasonable to project continued strength in the leisure and hospitality sector. This is backed up by recent statistics from the Bureau of Labor Statistics (BLS).
According to the BLS, the private sector created an average of 138,000 jobs per month over the past three months. Over that stretch of time, the leisure and hospitality sector accounted for an average of 38,600 jobs per month, or about 28% of all jobs created by the private sector.
Let’s go through the charts to find the best names in this sector for 2025.
1. United Airlines (UAL)
On Wednesday, stocks hit some serious turbulence after the Fed Chairman Powell warned investors that he would handle future rate cuts with caution. Some stocks took this news harder than others.
One name that shrugged off Wednesday’s losses was United Airlines UAL. After gaining 4.85% on Thursday, the stock was actually higher than it was before Wednesday’s selloff. This could be a sign that institutional traders are reluctant to sell the stock.
United shares have more than doubled since August, so a pullback is to be expected. That pullback has occurred on low to moderate volume (shaded yellow), again indicating that institutions may be reluctant to part with the stock.
Traders can initiate an entry at current levels with a half-sized position, and add the remainder in the event of a pullback to the stock’s 50-day moving average (blue).
GRADE: A-
2. Alaska Air Group (ALK)
Looking at the chart of Alaska Air Group ALK, you’d never suspect that this has been a turbulent week. This stock closed at a three-year high on Thursday, gaining 4.05%.
Alaska Air’s 50-day (blue) and 200-day (red) moving averages formed a bullish crossover in mid-October (green arrow), and the stock has been gaining altitude ever since.
GRADE: A
3. Intercontinental Hotels Group (IHG)
Like United Airlines, Intercontinental Hotels Group IHG, the U.K.-based hotel chain that features the Holiday Inn and Crowne Plaza brands, has pulled back after a significant climb. IHG has gained 37% year to date, and trades well above its bullish trend line (black dotted line), as well as its key 50-day (blue) and 200-day (red) moving averages.
With its trend line currently located near $121, and its 50-day MA at $120, this stock has solid support in the low 120s.
GRADE: B+
At the time of publication, Ponsi was long ALK.
