Investors can often find a bargain by looking for a company that’s trading at a discount to the other players in its industry. Over time, gaps in valuation should disappear.
That could mean overvalued companies in a sector pull back. But if there’s a company trading at a discount to others, it can likely stage a strong rally to close the gap. Several sectors offer such values today.
One sector with some undervalued pays is in travel and tourism. While largely recovered from the pandemic, several companies still trade at a discount.
One such name is online travel agency Expedia Group (EXPE). The company’s bookings are on the rise as consumers are getting budget-conscious about travel.
Expedia shares trade at just 10 times forward earnings. Revenues are ticking higher by 6% over the last year, and improving back-end operations should keep costs down, increasing profitability.
Action to take: Shares have been trending higher since the summer, and should continue to rally into the end of the year. Holiday travel deals could lead to a great quarterly report going into 2025.
Those trends point to a buy now, particularly for momentum investors.
For traders, the January 2025 $170 calls, last trading for about $8.30, could see mid-double-digit returns on a continued rally through the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.