May 2023 Performance Winners and Losers
The next few weeks will be pivotal in the performance of hospitality, travel, and tourism stocks for three reasons
(1) investor/industry conferences,
(2) a possible modest downshift in consumer spending with services finally decelerating, and
(3) the “Sell in May and Go Away” adage’s impact.
Investor and Industry Conferences Coming Up: Management Could Reset the Bar
During the first week of June, the following sector-impacting conferences will take place: NYU International Hospitality Industry Investment Conference, REIT Week (sponsored by the National Association of REITs), and Morgan Stanley’s hospitality conference.
With two-thirds of the second quarter complete, and the need for executives to provide full disclosure to investors, we may see press releases discussing trends. While generally the tone coming out of the first quarter was positive, the shares of many stocks have been trading sideways or down.
Possible Downshift in Consumer Spending: Services May Not Escape the Shift
In just the past week Costco Wholesale, Dollar Tree, Best Buy, Dick’s, Walmart, and Target all came in a bit light on sales. Of the many retailers reporting the past week, we picked these companies because they are broad-based and appeal to a wide spectrum of consumer price points.
Sell in May and Go Away
One of the many adages that investors focus on is that stocks tend to underperform from May to October. According to Fidelity, “Since 1990, the S&P 500 has gained an average of about 2% from May through October. That compares with a roughly 7% average gain from November through April” (Fidelity, 2023). The divergence in performance year to year and sector to sector can be significant, so this strategy doesn’t necessarily create alpha consistently.
How Can We Improve Hospitality Stockwatch ?
We started publishing Hospitality Stockwatch in January 2023 and have received helpful feedback. Keep it coming! Are there any investment areas, trends or data that would be helpful to be added or examined? For example, we heard from some of you that online travel agents should be included in our data set, and we have added Airbnb, Bookings, Expedia, and Travelocity.