The Zacks Analyst Blog Highlights:Avis Budget Group, Delta Air Lines, Royal Caribbean Cruises, iShares MSCI Frontier 100 ETF and Vanguard FTSE Emerging Markets ETF

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May 22, 2014, 09:30 ET

CHICAGO, May 22, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Avis Budget Group, Inc. (Nasdaq:CAR-Free Report), Delta Air Lines Inc. (NYSE:DAL-Free Report), Royal Caribbean Cruises Ltd (NYSE:RCL-Free Report), iShares MSCI Frontier 100 ETF (AMEX:FM-Free Report) and Vanguard FTSE Emerging Markets ETF (AMEX:VWO-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

3 Stocks for Memorial Day Weekend

After being stuck indoors through long and harsh winter, more Americans are expected to head outside on Memorial Day weekend. According to AAA, more than 36 million people are expected to travel a minimum of 50 miles over this period.

Travelers to Rise

Data from the annual survey released last week reveals that the number of people heading out for the holiday weekend this year could be the highest since 2005. That year, 44 million people traveled over the holiday weekend. The projected increase this year is being attributed to a rise in the number of employed citizens and an increase in disposable income.

The number of people traveling will be 18% higher than the figure recorded in 2009. During that year, only 30.5 million Americans decided to travel on the Memorial Day weekend. Since 2011, numbers have been on the rise once again.

Drivers Lead the Pack

The report also predicts that most travelers will literally hit the road, with 31.8 million expected to drive. This is 1.3% higher than last year's figure of 31.4 million. A major incentive for this increase is the reduction in gas prices. An increase in supply has significantly reduced prices from last year's average of $3.63.

However, the number of air travelers will also increase, by 2.4% to 2.6 million. Another 1.7 million will take a bus or train or go on a cruise. This is an increase of 6.5% compared to last year.

Will It Cost More?

Traveling this weekend could be costlier than last year, says AAA. At around $169 per night, you would have to pay $3 more for a hotel room compared to last year. Similarly, the average cost of a round-trip plane ticket will increase from $215 to $227 this year.

At $44 a day, car rentals will experience an increase of 1% compared to last year. However, personal income has increased by 3.4% from last year and so the rise in prices should not be a deterrent to travelers.

Below we present three stocks poised to benefit from the increase in travel this weekend, each of which also has a good Zacks Rank.

Avis Budget Group, Inc.

Avis Budget Group, Inc. (Nasdaq:CAR-Free Report) provides vehicle rental services through a network of approximately 10,000 car and truck rental locations in the U.S., Canada, Australia, New Zealand, Latin America, the Caribbean, and parts of Asia. The company was founded in 1946 under the name Cendant Corp., which it later changed to Avis Budget Group in 2006 after a spinoff.

Avis Budget Group holds a Zacks Rank #1 (Strong Buy) and expects earnings growth of 26.8%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 19.38.

Delta Air Lines Inc.

Delta Air Lines Inc. (NYSE:DAL-Free Report) is the second largest U.S. airline and provides scheduled air transportation for passengers and cargo throughout the U.S., and around the world. The company's route network is centered on the hub system that it operates at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York- John F. Kennedy International Airport (JFK), Salt Lake City, Paris- Charles de Gaulle, Amsterdam and Tokyo-Narita.

Currently the company holds a Zacks Rank #1 (Strong Buy) and expects earnings growth of 15.4%. It has a P/E (F1) of 12.76.

Royal Caribbean Cruises Ltd.

Our third choice is Royal Caribbean Cruises Ltd (NYSE:RCL-Free Report). The company has five cruise brands Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Cruises and CDF Croisières de France. Additionally, it has 50% investment in a joint venture with TUI AG, which operates the brand TUI Cruises.

Apart from a Zacks Rank #2 (Buy), Royal Caribbean Cruises expects earnings growth of 26.3%. It has a P/E (F1) of 15.73.

The increase in temperatures will provide a welcome boost to companies related to travel and tourism. This is why these stocks would make for good choices for you ahead of this holiday weekend.

This ETF Leads the Emerging Markets Rally

After a lackluster 2013, emerging markets have shown a nice comeback in recent months on low valuations and attractive stock prices. Most stocks in the developed world have become pricey, compelling investors to pull out their money from these markets and park them in cheaper ones.

In particular, frontier or "pre-emerging" markets have been the biggest beneficiaries of this trend and are leading broad emerging market funds by wide margins this year. This is especially true as iShares MSCI Frontier 100 ETF (AMEX:FM-Free Report)added about 13.6% in the year-to-date time frame compared to the gains of 3.8% for the most popular Vanguard FTSE Emerging Markets ETF (AMEX:VWO-Free Report).

This trend is likely to continue given encouraging fundamentals in these countries and the fund's impressive new holdings post index rebalancing (read: Invest in Surging Frontier Market ETFs).

Frontier Market Outlook

Frontier markets offer huge diversification benefits and strong growth relative to the emerging and developed economies. Though the stock markets in the frontier countries are smaller and less liquid, these have more room for upside than the emerging markets, and have relatively lower correlations and higher income yields.

In particular, the frontier markets are in the early stages of development and are in the verge of emerging as most of the countries are performing remarkably. For example, Nigeria recently overtook South Africa to become Africa's largest economy and it has a low debt/GDP ratio, rising population, higher oil prices and accelerating growth, which are likely to provide further boost to the economy.

Unlike the emerging markets, most of the frontier countries have seen steady currency fluctuations in the past several months as these often peg their currencies to the U.S. dollar or to a basket dominated by the U.S. dollar. In addition, stocks in these countries are trading at attractive levels given their lower valuations than the developed and emerging market stocks.

Further, these have been less impacted by the Fed taper, suggesting their strength in the taper-trodden world (read: Frontier Market ETFs: Better International Investments?).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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