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3 Travel Stocks to Watch Heading Into the Holidays
Written by Chris Markoch. Published 10/6/2025.
Key Points
- A strong outlook for earnings growth and margin expansion supports Expedia’s stock valuation despite trading above consensus targets.
- Profit-taking has pressured Royal Caribbean stock, but analysts see upside fueled by strong demand, a healthier balance sheet, and rising dividends.
- Fuel hedging and strong earnings growth projections position Southwest Airlines well if holiday travel demand meets expectations.
As fall sets in, investors should already be eyeing the upcoming holiday travel season and its impact on travel stocks. A recent TravelAge West report forecasts a 1% rise in travel and entertainment spending, bucking declines in other areas like gift purchases.
Despite potential rate cuts, consumers will still seek value—and so should investors. These three travel stocks balance opportunity and risk heading into the holidays.
Expedia Shows the Distinction Between Price and Value
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Expedia Group Inc. (NASDAQ: EXPE) ranks among the leading online travel companies. Over the past three years, EXPE has delivered a total return of 129.6%. While growth has slowed somewhat in 2025, shares are still up over 16% year to date and more than 24% in the past three months.
That rally has driven EXPE roughly 4% above its consensus price target, raising valuation questions. Yet with the holiday travel season approaching, several factors suggest further upside:
First, in September, Mizuho lifted its price target to $240 and BTIG Research to $250. Second, although Expedia trades at about 17x forward earnings, analysts expect earnings to climb 20% in the next 12 months—implying a discount to its future growth. Third, unlike some peers issuing cautious guidance, Expedia forecasts robust margin expansion through year-end, building on a 24% EBITDA margin gain in its most recent quarter, a trend likely to strengthen as holiday bookings rise.
Royal Caribbean: Smooth Sailing After a Pullback
Royal Caribbean Group (NYSE: RCL) has mounted one of the industry’s strongest recoveries since COVID-19. The stock returned over 765% in three years and is up 37% in 2025, driven by resilient travel demand and a balance-sheet repair following its heavy 2020 debt load.
Shares dipped more than 12% in the past month, reflecting profit-taking after RCL hit an all-time high above $365 following its second-quarter earnings beat. Although the consensus price target of $326.95 implies limited near-term upside, several analysts still set targets near or above $400, signaling confidence in further growth.
Additionally, Royal Caribbean boosted its dividend by 25% this year, enhancing its appeal to shareholders. With strong demand, improving fundamentals, and ongoing capital returns, RCL remains a stock to watch as holiday travel ramps up.
Southwest Airlines: Hedging Its Way to Holiday Strength
Southwest Airlines Co. (NYSE: LUV) also appears undervalued relative to future earnings expectations. Analysts forecast over 50% earnings growth over the next 12 months, making its 20x forward P/E ratio especially notable.
The carrier’s hedging strategy should help mitigate rising jet fuel costs. Meanwhile, lower interest rates could boost demand for low-cost, domestic travel—Southwest’s sweet spot.
LUV is down about 3.5% year to date after peaking in July, and shares may have further room to fall. But with October earnings approaching and holiday travel demand poised to be a catalyst, Southwest could offer an attractive entry point if forward guidance confirms robust seasonal bookings.
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