NEW YORK (TheStreet) -- Hotel, resort and cruise companies can be risky investments, but there are still firms in the industry that can be good buys. With the economy doing better, people have more disposable income to spend on luxuries. Also, summer is around the corner -- the busiest season for hotels, resorts and cruises, as more people will be using their vacation days to unwind. With the economy growing and consumer credit rising, hotel, resort and cruise stocks can benefit investors.
In the U.S. alone, travel and tourism generated about $2.1 trillion in 2014, up from $1.5 trillion in 2012. And the industry is credited in supporting nearly 8 million jobs. International travel to the U.S. is projected to grow 3% annually through 2018, according to the U.S. Department of Commerce.
So, what are the best hotel, resort and cruises stocks for investors today? Here are the top three, according to TheStreet Ratings, TheStreet's proprietary ratings tool.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Check out which hotel, resort and cruise stocks made the list. And when you're done, be sure to read about which online retail and e-commerce companies to buy now. Year-to-date returns are based on May 15, 2015, closing prices. The highest-rated stock appears last.