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Is it too late to buy this mid cap growth star?

James Mickleboro
Star Performer

With the market storming higher on Friday a number of shares have managed to post strong gains today.

One standout for me has been the Helloworld Travel Ltd (ASX: HLO) share price which climbed 3.5% to an all-time high of $5.60 at one stage.

Is it too late to buy Helloworld Travel shares?

Although this integrated travel company’s shares are at an all-time high, I don’t for a second believe that it is too late to snap up shares.

Last month I felt Helloworld posted one of the strongest results during earnings season.

It delivered total transaction value growth of 3.5% to $6.1 billion, underpinned by strong air ticket sales volume growth. Although revenue remained flat at $326.9 million due to the impact of lower airfares, the company delivered a massive 48.1% increase in profit after tax to $32 million.

On a per share basis, earnings came in at 26.9 cents. Which means its shares are still only changing hands at a touch under 21x full year earnings.

I think this is great value compared to its peers, especially given how management has forecast earnings growth in the region of 16.5% and 23% in FY 2019.

As a comparison, Corporate Travel Management Ltd (ASX: CTD) shares are currently priced at 43x earnings and Webjet Limited (ASX: WEB) shares are trading at 34x earnings before acquisition amortisation.

While fellow travel agent Flight Centre Travel Group Ltd (ASX: FLT) is trading at a similar level just above 21x earnings, I feel its growth profile is very different to the other three and expect low teen earnings growth at best in FY 2019.

In light of this, I think Helloworld offers a compelling risk/reward at the current share price and wouldn’t be surprised to see its shares rerate higher if its first half results position it to hit the high end of its guidance.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Flight Centre Travel Group Limited. The Motley Fool Australia owns shares of Helloworld 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.