While AI Plays Flounder, Stocks in This Sector Are Hitting All-Time Highs
When these names are performing well, it’s usually a bullish sign for the economy. Here are three from this surprising group soaring to new heights.
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According to the American Automobile Association (AAA), between Dec. 20 and New Year’s Day, the coming holiday travel surge will see 122.4 million Americans travel 50 or more miles from home. Of those traveling, 89% will do so by car.
One driving factor is the low price of gasoline. As seen in the chart below, RBOB Gasoline futures have been steadily falling since the start of the year. Gasoline futures are now at a five-year low, and are trading at their lowest levels since the early days of the Covid-19 pandemic.
Meanwhile, the employment outlook remains dreary. According to Tuesday’s employment report from the Bureau of Labor Statistics, over the past three months, a total of 67,000 jobs have been created, for an average of 22,333 jobs per month for the past three months.
To be fair, the headline figures are skewed by government layoffs. The figures for the private sector show 225,000 jobs created over the past three months, for a monthly average of 75,000. Not as bad, but still not great.
Hotel Stocks Are Hot
About 15,000 jobs per month are being created in the travel and leisure sector. Historically, that’s not a high figure, but hotel stocks don’t seem to mind. In fact, shares of three major U.S. hotel chains just reached new all-time highs this week.
When hotel stocks are performing well, it’s usually a bullish sign for the economy. Business meetings and sales events are often more effective in person. Strength in this sector seems to contradict the narrative presented by this week’s job’s figures.
InterContinental Hotels Group
First up is InterContinental Hotels Group (IHG), home of the Holiday Inn, Crowne Plaza, and Kimpton brands. Shares of the U.K.-based hospitality provider closed at an all-time high on Wednesday, and have gained 10% over the past month. Nvidia (NVDA) , Advanced Micro Devices (AMD) , and Broadcom (AVGO) all have lost ground over that stretch.
A series of higher lows and higher highs is visible on the hard right edge of the chart. IHG’s 50-day (blue) and 200-day (red) moving averages, which were flat for most of this year, are starting to climb.
GRADE: A
Hilton Worldwide Holdings
Hilton Worldwide Holdings (HLT) also reached an all-time high earlier this week. The Virginia-based hotelier, which lists Hampton Inn and Embassy Suites among its 20 brands, has gained 7.5% over the past month.
Hilton’s bull channel (black lines) is weaker than the trend on IHG’s chart, but the stock still managed to reach a new high.
GRADE: B
Marriott International
Marriott International (MAR) is also climbing within a bull channel (black lines). The Bethesda, Maryland-based hotelier boasts 9,000 locations and 1.7 million rooms, making it one of the largest companies of its kind.
Marriott has a nearly identical chart to Hilton, so it’s only fair to give it an identical grade.
GRADE: B
Bottom Line
While this week's jobs report demonstrated economic weakness, hotel stocks are telling a different story. Hotels are hitting new highs despite economic headwinds, a bullish sign.
At the time of publication, Ponsi was long IHG, AMD, AVGO and NVDA.
