As the Omicron strain of the coronavirus pandemic spreads at a seemingly unrelenting pace, some investors are growing apprehensive regarding travel and leisure equities.
Those concerns could eventually give way to opportunities with assets such as the ALPS Global Travel Beneficiaries ETF (NYSEARCA: JRNY). The consumer cyclical sector, which is home to many JRNY components, is coming off a strong fourth quarter, prompting some concern that the sector is overvalued.
The group is “trading at a median 3% premium to our fair value estimates. Despite this, valuations in the space have become more attractive, with 30% of stocks in the sector trading in 4- or 5-star territory (a marked improvement from 16% three months ago),” says Morningstar analyst Erin Lash. “In this context, we think travel and leisure is ripe for investment, as we don’t expect rising case counts will permanently depress consumers’ desire to travel.”