NEW YORK (Reuters) – Bargain-hunting investors are eyeing the shares of airlines, hotels, cruise lines and other companies that have been among the worst-hit by the coronavirus outbreak.
The recent declines have brought down the valuations of travel and leisure-related companies to levels some investors are believe are attractive. American Airlines Group Inc (AAL.O), for example, now trades at a forward price-to-earnings ratio of 3.3, compared to 5.4 at the start of the year. Marriott International (MAR.O) trades at 17.6 compared to 23.2, while the forward price for Carnival Corp (CCL.N) has fallen to 6.4 times forward earnings from 11.6 at the start of the year.
Few believe these companies are in the clear, as the outbreak continues to accelerate beyond China’s borders to the United States and other countries. On Friday, Reuters reported that U.S. officials are considering ways to discourage U.S. travelers from taking cruises. Shares of Carnival Corp hit an 11-year low, while shares of Royal Carribbean touched 5-year lows.
Yet the sharp decline in stocks tied to tourism and leisure in the wake of the virus’ spread has pulled down valuations in the battered sectors and attracted the attention of investors looking to take advantage of recent market declines.
Noah Hamman, chief executive of Advisorshares, an investment firm that focuses on actively-managed exchange-traded funds, is adding to positions in airlines that focus on regional and domestic travel, such as Hawaiian Holdings Inc (HA