The travel stock opportunities beyond airlines
Travel stocks are the way forward for two fund managers with both AMP and American Century backing the sector for recovery.
Stocks in this sector had been especially beaten up in the pandemic as a result of the travel restrictions which limited international flights. However, with the COVID-19 pandemic being deployed, it was hopeful that these would be eased and flights would resume in the near future. As of March, 2021, Qantas said it hoped to resume international flights by October.
As well as the usual travel stocks such as Qantas, managers were expanding this and considering areas such as leisure and aircraft engineering.
In a webcast, Brent Puff, manager of the American Century Focused Global Growth fund, said a new holding for his fund was booking website Booking.com, a 3.15% weighting.
“The business has been hit hard by COVID-19 but there is a lot of pent-up demand among people to travel again and business will come back very quickly. That is based on the experience of the hotel market in China and how it recovered.”
He also owned US aviation stock Heico which manufactured aircraft parts and said he expected it to gain market shares as customers were financially-stressed as a result of the pandemic. This was a common theme in the portfolio where Puff was looking for stocks which were likely to gain market share against competitors and could emerge from the pandemic in a stronger position.
“Boeing is the dominant player in this sector but Heico is selling parts 30% cheaper than them. They are suffering in the downturn like everyone else but we think they will gain market share because the lower prices will resonate with those who are financially stressed,” he said.
“They are also more acquisitive which is the core part of their growth strategy and I suspect they will exit the downturn in a stronger position because they are disrupting the market.”
Shares in Heico were up 6% over one year to 3 March, 2021, while those in Booking.com were up 31%.
Meanwhile, at AMP Capital, Australian equity managers Matt Griffin and Dermot Ryan said they were holding stocks such as Webjet, Crown, and Ingenia.
“We own Ingenia Group which own holiday parks and they are benefitting from domestic tourism and from people staying there long-term, they have even bought more land,” they said.
“We also like Crown as people are keen to go out to new places and visit new venues.”
Ingenia and Crown were both in positive territory over one year to 3 March, 2021, but Webjet shares were still down 15% over the same period.
AUTHOR
Laura Dew
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
