The S&P/ASX 200 Index (INDEXASX: XJO) rose 21.8% in 2019. As Foolish investors, we aim to build a portfolio of stocks and ETFs that will beat the market over the long term. The key to this thinking is that the investing time horizon in focus is multiple years in the future – Warren Buffett even believes in the idea of holding your stocks forever!
The ASX travel stocks discussed below lost out to the market in 2019. However, I don’t believe that they will lose over the long term. This makes them worth a look for your stock portfolio.
Webjet Limited (ASX: WEB)
Up 18.6%% in 2019, $1.78 billion market capitalisation
Webjet operates the leading business to consumer (B2C) travel brand Webjet, as well as a range of other brands in both the B2C and business to business (B2B) travel booking industry. The company had a rough 2019, with the collapse of partner and debtor Thomas Cook and the growth of Google’s presence in online booking. That said, Webjet still has a long runway for growth.
The travel industry is highly fragmented. This means that the industry isn’t dominated by 1 or 2 large players that have a lot of pricing power. Webjet has recently seen healthy earnings before interest, tax, depreciation and amortisation margins near 30%. The industry being fragmented also provides great optionality for companies looking to make acquisitions, which is something that Webjet has done well in the past.
The combination of strategic acquisitions and high margins means that the company can target profitable growth for the foreseeable future.
Corporate Travel Management Limited (ASX: CTD)
Down 4.4% in 2019, $2.25 billion market capitalisation
Corporate Travel supplies corporate travel booking services in North America, Europe, Asia and Australia and New Zealand. The stock has been a great performer over the last 9 years with a compound annual growth rate (CAGR) of 32.4%. The company also benefits from the same fragmentation as Webjet.
The stock has been struggling ever since hedge fund VGI Partners raised a short attack in October 2018. Since the short, the company has been focused on executing at the business level. This type of focus is exactly what I want to see from management in this situation and the business results have reflected this.
Foolish bottom line
Both of these travel companies lost to the market in 2019, but have been great long-term performers. As high quality businesses, I believe that 2019 was the outlier in their stock price growth as a result of one-off events.
If Webjet and Corporate travel don’t take your fancy, take a look at these other quality businesses.
The post Will these ASX travel shares beat the market in 2020? appeared first on Motley Fool Australia.
Our Motley Fool experts have just released a fantastic report, detailing 5 dirt cheap shares that you can buy today.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
- Man bets $221,666 on one ASX stock
- Top analysts name their top 3 ASX blue chip shares for 2019
- 3 quality dividend shares to boost your income
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- 5 Stocks for Potentially Building Wealth After 50
Motley Fool contributor Lloyd Prout owns shares in Webjet Limited and Corporate Travel Management Limited and expresses his own opinions.. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020