Peak Over for U.S. Travel Stocks, but China’s Travel and Lodging Stocks Just Getting Started

January 28th, 2014
in contributors

by George Leong, Profit Confidential

The Chinese are on the move and unless you enjoy crowds and mass chaos on the roads, rails, and in the sky, I don't advise you ever go and visit China during this time of the year.

This very intensive travel period is the busiest in the Chinese calendar year-akin to Christmas and Thanksgiving Day, but much more chaotic when you consider the size of the population. In China, it's known as "Chunyun"-a 40-day period around the Chinese New Year when the masses (and we mean masses when talking about China) scramble to travel. This is the time when families reunite for big dinners, to set off fireworks, and to share their plans for the year ahead.

Follow up:

If you think Black Friday or New York City at their peaks were bad, it's nothing compared to what happens in China during this stretch, which would even make the native NYC commuter queasy.

According to the National Development and Reform Commission (NDRC), about 3.62 billion passenger trips will be undertaken during this 40-day stretch. (Source: "Transport system to be fully stretched for 'Chunyun,'", January 14, 2014.) That's a lot of people.

And whether it's the roads, rails, or sky, everything will be one big massive network of travel: Approximately 258 million train rides will occur during the period, according to the China Railway Corporation. In the sky, there are estimated to be around 42 million flights, based on predictions from the Civil Aviation Administration of China. And the roads...well, think "parking lot." (Read "My Favorite Chinese 'Car' Company.")

Yet while we can avoid this somewhat-organized chaos, you can rest assured that the Chinese hotel and travel industry is going to make money off of it.

In the rail area, a mid-cap U.S.-listed Chinese railroad stock that I follow is Guangshen Railroad Company Limited (NYSE/GSH, $19.93, market cap: $2.81 billion), which trades as American depositary shares (ADS). The company is focused on the passenger segment, which includes the Guangzhou-Shenzhen inter-city train service in southern China, which connects these two economic and manufacturing hubs, along with the Hong Kong Through Train passenger service, operated in conjunction with MTR Corporation in Hong Kong.

Guangshen Railroad provides a possible longer-term buying opportunity with above-average growth for the aggressive investor.

Guangshen Railway Co. Ltd. Chart
Chart courtesy of

Now many of the travelers also need a place to hunker down unless, of course, they don't mind squeezing in with their families or relatives. (Personally, I would opt for the hotel.)

On this note, a value-oriented U.S.-listed Chinese hotel chain worth a look is China Lodging Group, Limited (NASDAQ/HTHT, $29.79, market cap: $1.83 billion). You could say that China Lodging is kind of like the "Super 8," "Howard Johnson," or "Comfort Inn" of China.

China Lodging Group Ltd. Chart
Chart courtesy of

China Lodging operates more than 1,200 high-quality, conveniently located, and reasonably priced economy to mid-scale hotels. While I haven't stayed at one of the company's hotels, I have stayed at other major Chinese hotel chains and can say they are a pretty good value, which makes them an attractive choice to travelers.

So for the next 40 days, stay away from China unless you want to vaporize into the traveling masses that promise to take hold. Instead, experience the joys of Chunyun from the comfort of your own home through U.S.-listed Chinese travel and lodging stocks.

This article Peak Over for U.S. Travel Stocks, but China's Travel and Lodging Stocks Just Getting Started was originally posted at Profit Confidential

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