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Key Takeaways
- Josh Brown, CEO of Ritholtz Wealth Management, has added Delta Air Lines to his “Best Stocks in the Market” list, citing evidence high-income consumers are continuing to spend on travel.
- Brown and colleague Sean Russo also put Expedia on the list. The company raised its outlook for full-year sales and profitability in its third-quarter earnings report last month.
Data says times are tough. The unemployment rate rose and inflation accelerated in September. Companies laid off more than 150,000 employees in October. Last month consumer sentiment fell to its lowest level since 2022.
All told, it doesn’t sound like a great time to invest in companies that sell vacations.
That’s not scaring away Josh Brown, CEO of Ritholtz Wealth Management. Brown and colleague Sean Russo earlier this month added Delta Air Lines (DAL) to their Best Stocks in the Market list.
“The media wants for there to be some confirming evidence that the consumer is faltering,” said Brown on CNBC Tuesday. “And the reality is that they’re not.”
Why This Is Important
Travel demand has remained resilient this year despite economic concerns stemming from tariffs, inflation, and a weakening labor market. Some investors expect companies catering to affluent travelers will continue to have the most success weathering economic turbulence.
Airport security screened a record number of passengers on Nov. 30, Brown points out, at more than 3.1 million. He notes that cruise lines, hotel operators, and airlines have across the board reported resilient results despite economic fears. “The companies are telling you that the consumer is not only not slowing down their travel,” Brown said. “In some categories, they’re accelerating.”
Delta “consistently leads network carriers in operational performance,” wrote Russo earlier this month. He and Brown argue the airline’s focus on quality and premium experiences has strengthened its financials, and should serve it well in the future.
In the third quarter, high-margin premium, loyalty, and partnerships segments, which cater to more affluent customers, accounted for 60% of total revenue at Delta, according to Russo. Those consumers feel less pressure from an uncertain job market and rising inflation.
Expedia (EXPE) is another travel company that’s found its way onto Brown and Russo’s list. Room bookings increased 11% in the third quarter, “driven by the fastest U.S. growth in three years,” the company said in November. The company also raised its forecast for full-year revenue and margin growth.
“Delta and Expedia are proof that service quality paired with pricing power can translate to returns, even in less optimal economic environments,” wrote Russo.
