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.

 

HOT ChartHOT data by YCharts

3. Starwood Hotels & Resorts Worldwide  (HOT)
Rating: B

Market Cap: $14.5 billion
Year-to-date return: 4.6%

Starwood Hotels & Resorts Worldwide, together with its subsidiaries, operates as a hotel and leisure company worldwide.

"We rate STARWOOD HOTELS & RESORTS WRLD (HOT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, STARWOOD HOTELS & RESORTS WRLD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.4%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • STARWOOD HOTELS & RESORTS WRLD's earnings per share declined by 18.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, STARWOOD HOTELS & RESORTS WRLD increased its bottom line by earning $3.50 versus $2.92 in the prior year. For the next year, the market is expecting a contraction of 14.9% in earnings ($2.98 versus $3.50).
  • Net operating cash flow has significantly decreased to $55.00 million or 63.08% when compared to the same quarter last year. Despite a decrease in cash flow of 63.08%, STARWOOD HOTELS & RESORTS WRLD is in line with the industry average cash flow growth rate of -68.57%.

RCL ChartRCL data by YCharts

2. Royal Caribbean Cruises  (RCL)
Rating: B

Market Cap: $16.4 billion
Year-to-date return: -9.3%

Royal Caribbean Cruises operates as a cruise company. The company operates ships under the Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, CDF Croisieres de France, and TUI Cruises brand names.

"We rate ROYAL CARIBBEAN CRUISES (RCL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 31.99% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RCL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ROYAL CARIBBEAN CRUISES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ROYAL CARIBBEAN CRUISES increased its bottom line by earning $3.42 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($4.55 versus $3.42).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 71.0% when compared to the same quarter one year prior, rising from $26.46 million to $45.23 million.
  • Net operating cash flow has increased to $426.43 million or 35.03% when compared to the same quarter last year. In addition, ROYAL CARIBBEAN CRUISES has also vastly surpassed the industry average cash flow growth rate of -68.57%.

CCL ChartCCL data by YCharts

1. Carnival Corporation (CCL)
Rating: B

Market Cap: $36.1 billion
Year-to-date return: 5.7%

Carnival Corporation operates as a cruise company worldwide. It provides vacations to various cruise destinations.

"We rate CARNIVAL (USA) (CCL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CARNIVAL (USA) reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CARNIVAL (USA) increased its bottom line by earning $1.58 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus $1.58).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 345.0% when compared to the same quarter one year prior, rising from -$20.00 million to $49.00 million.
  • Net operating cash flow has significantly increased by 61.63% to $771.00 million when compared to the same quarter last year. In addition, CARNIVAL (USA) has also vastly surpassed the industry average cash flow growth rate of -68.57%.

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