As seen from booming travel numbers over the July 4 holiday, it’s clear that it’s not just hype that’s fueled a reopening rally for travel stocks. After getting hammered at the onset of the Covid-19 pandemic, major stocks in the airline, casino, cruise line, and hotel industries have bounced back tremendously from their lows.

Things are seemingly getting back to normal. But, the travel economy may not be out of the woods just yet. In the months ahead, it all comes down to whether the outbreak of the Covid-19 delta variant gets worse. The variant has so far spread to more than 90 countries, including the U.S.

Since it began making headlines, travel stocks pulled back slightly. But, for the most part, investors have shrugged off this concern. Mostly, due to the belief that the current crop of vaccines from Johnson & Johnson (NYSE:JNJ), Moderna (NASDAQ:MRNA), and Pfizer (NYSE:PFE) will contain this new outbreak.

Yet, millions in the U.S. are not vaccinated. There’s also uncertainty over the effectiveness of the current vaccines against this variant. Travel stocks, still priced based on pent-up demand, and a fast return to normal may be in for big declines in the second half of 2021. So, ahead of possible continued pullback, which travel stocks should you take profit on? It may be high time to cash out if you own any of these seven vaccine recovery winners:

• American Airlines (NASDAQ:AAL)
• Airbnb (NASDAQ:ABNB)
• Caesars Entertainment, Inc. (NASDAQ:CZR)
• OneSpaWorld (NASDAQ:OSW)
• Marriott International (NYSE:MAR)
• MGM Resorts International (NYSE:MGM)
• Royal Caribbean (NYSE:RCL)

Travel Stocks: American Airlines (AAL)

It fell from around $29 per share to single-digits when the outbreak first hit. But, AAL stock has seen a solid rebound since the  vaccine rollout late last year. As things have gradually gotten back toward normal for air travel demand, shares more than doubled between November 2020 and March 2021.

Since then, shares have traded sideways. Yet, don’t view this as an opportunity to “buy the pullback” prior to American Airlines making a full recovery to its pre-outbreak price levels. Why? For starters, rival legacy carriers appear to be much stronger opportunities.

Analysts at Jeffries pointed out Delta Airlines’ (NYSE:DAL) continued recovery prospects. United Airlines (NASDAQ:UAL) expects to return to profitability this month. In addition, American Airlines faces headwinds related to its over-leveraged balance sheet. As InvestorPlace’s Tom Kerr wrote June 29, the carrier’s debt position (including lease liabilities) soared from $33.4 billion to $41.4 billion during the pandemic. Even if its business returns to pre-pandemic levels in the next two years, the stock price today may more than account for it.

And, that’s assuming the delta variant doesn’t slow things down a bit. With its debt-laden balance sheet giving it little room for hiccups, investors who bought AAL stock near its bottom may want to take the money and run, as it trades for around $21 per share.

Airbnb (ABNB)

Going public at the start of the vaccine recovery, Airbnb shares skyrocketed from its IPO price of $68 per share to prices well over $200 as travel stocks became overheated. However, since the spring, things have cooled down a bit, with the stock now trading for around $146 per share.

This happened for several reasons. As I broke it down on May 28, much of its decline had to do with its status as a “meme stock”/Reddit stock. When this trend cooled, so did ABNB stock. The selloffs in tech-based names due to inflation/interest rate worries, as well as the impending expiration of its insider lockup period, also played a role.

Yet, even at lower price levels, you could still call Airbnb a priced for perfection stock. How so? Trading for a rich multiple (13x) of its projected 2022 revenues, the company needs its sales to not only get back to its pre-outbreak high water mark ($4.8 billion), but hit levels substantially above that, just to meet expectations.

As recent travel numbers have shown, this may be attainable. But, if the delta variant leads to another big change in the world’s travel plans? Still-overvalued ABNB stock could be a risk of a massive correction.

Travel Stocks: Caesars Entertainment (CZR)

Casino stocks like Caesars have performed well over the past year for two reasons. First, with the rapid expansion of online gambling in the U.S., names like this one, MGM (more below), and Penn National (NASDAQ:PENN) saw their shares rebound strongly. Even as their land-based operations remained in limbo.

Second, the vaccine rollout, and the return of business as usual for regional casinos, as well as tourist-oriented casinos in Las Vegas. As a result, CZR stock not only made up for its pandemic losses. It now trades at prices over 40% above pre-outbreak levels. This may signal limited upside from here in the near term, as its valuation appears stretched. Caesars currently trades for about 43x projected 2022 earnings.

It may also signal big downside risk, if this new variant results in a return to social-distancing measures. Admittedly, the currently available vaccines may be enough to keep things under control. But, given stalling vaccination levels, and a lack of clarity regarding their effectiveness against this variant, only time will tell whether this more optimistic take plays out.

Down 11% in the past month, CZR stock started to selloff, likely on both the valuation and delta variant concerns. It may eventually fall to a more attractive entry point. But, for now, it’s best to stay away from this pandemic recovery winner.

OneSpaWorld (OSW)

Despite its operating business (spas on cruise ships) being offline for more than a year, OSW stock has been fairly resilient throughout this health crisis. Shares took a serious dive at the onset, falling from around $15 per share to as low as $2.45 per share.

But, over the past 16 months, shares made up most of their losses. The stock currently trades for around $9.45 per share. Yet, this epic rebound may not last for long. Built completely on the pent-up demand narrative surrounding cruise line stocks, investors may be in for big disappointment.

Why? Mainly, like with many travel stocks, investors have more than priced-in recovery prospects. OneSpaWorld currently trades for nearly 50x analyst consensus for next year’s earnings. Not only that, these projections may hinge on a fast recovery. The delta variant may threaten this thesis.

Another area of concern: the recent secondary offering. Simply put, this isn’t a capital raise. Instead, insiders, including one investor (Steiner Leisure) that provided a capital infusion last year, are cashing out. If those more in the know are selling, do you want to be buying? As it continues to trade on optimistic assumptions about a cruise industry rebound, consider this a “steer-clear” situation.

Travel Stocks: Marriott International (MAR)

Hotel occupancy rates are back to levels last seen in 2019. With this, it makes perfect sense that major hotel stocks, such as Marriott, along with rivals like Hilton (NYSE:HLT) and Hyatt (NYSE:H) have more or less recovered.

But, with uncertainty no longer factored in, do you want to own them? It’s questionable. As seen from their respective forward valuations (price-to-earnings, or P/E, ratios around 30x), the recovery seems fully priced-in.

Sure, these valuations could hold if pent-up demand continues to boost results in 2022 and 2023. Yet, there are many ways the bullishness for hotel stocks could continue to shift toward bearishness. Obviously, if the delta variant gets worse in the U.S. and Europe, it could result in names like MAR stock falling short of expectations. But, even if variant fears prove to be overblown, this hotel franchisor and similar names may have more room to pullback.

The main reason? Sooner-than-expected interest rate increases could lead to valuation contraction, hammering stocks like Marriott back to lower price levels. Given its historic valuation, any sort of contraction may be slight. Then again, with the other risks considered, it may be a sign not to dive in today at around $140 per share. This venerable hospitality brand may still make for a great core holding, as one Seeking Alpha commentator put it back in May. But, until it sells off some more, you may want to avoid buying it.

MGM Resorts International (MGM)

Just like Caesars, MGM has been flying high, thanks to the two gaming industry tailwinds (land-based recovery and  acceleration of online gambling). With most of its brick-and-mortar operations located in Las Vegas, news of gaming revenues climbing back to 2019 levels bodes well.

As for its budding online operations? Its betMGM joint venture with Entain (OTCMKTS:GMVHY) is targeting $1 billion in revenue next year. The company is also doing well with its asset monetization efforts. Buying out its 50% partner in its Las Vegas City Center development, the company quickly entered a sale-leaseback deal worth $3.9 billion with the Blackstone Group (NYSE:BX).

So, with so many positive developments, why might one want to cash out of MGM stock? Again, like with CZR stock, all of its recent change in fortunes may be more than reflected in its stock price. Investors have bid stock up more than 146% in the past year, on the expectation of blockbuster land-based gaming results thanks to pent-up demand, along with continued booming growth for its online joint venture.

In recent weeks, shares have moved up and down, as markets factor in valuation and delta variant concerns. With more that could sink it than send it soaring from here, what may be the best move? If you bought this ahead of the reopening, it may be wise to take some risk off the table. Sell into its (possibly fading) strength.

Travel Stocks: Royal Caribbean (RCL)

Cruise ships may be setting sail once again starting this month. But, investors have already priced names like RCL stock as if they’ve made substantial recovery progress. At around $82 per share, it may still be down from levels seen in January 2020 (over $130 per share). Yet, investors may have put the cart before the horse, assuming it’s all smooth sailing from here.

The details suggest otherwise. Industry analysts predict a slower recovery, relative to other segments of the travel economy. Even if the delta variant fails to impact a return to the high seas by cruise line aficionados, shares today may overestimate how quickly things will return to normal.

Worse yet is the high level of debt Royal Caribbean took on to ride out Covid-19. As InvestorPlace’s Dana Blankenhorn wrote on June 11, the company’s debt rose from $13 billion to $21 billion between March 2020 and March 2021. Cleaning up its balance sheet will either take many years to accomplish or heavy shareholder dilution via equity infusions.

With so much hype surrounding this sector, travel stocks in-general do not look to be great buys right now. But, cruise stocks in particular, like RCL stock, and its main rival, Carnival (NYSE:CCL)? They appear set to fall tremendously once investors stop buying them on the headlines and start selling them based on their weak fundamentals.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.