2 ASX travel shares to consider buying

Webjet and Corporate Travel could be good ASX share options.
The post 2 ASX travel shares to consider buying appeared first on The Motley Fool Australia. –

The ASX travel share sector could be a good place to look for recovery ideas as earnings start heading into profitable territory again.

It has been a difficult 18 months for the ASX travel share sector with limited travel, restrictions and big losses.

However, there may be light at the end of the tunnel with talk of borders reopening and a growing number of people being vaccinated – bringing the opening up targets of NSW and VIctoria closer.

With that in mind, these two ASX travel shares could be ones to consider:

Webjet Limited (ASX: WEB)

Webjet is currently rated as a buy by the broker UBS with a price target of $6.35. The broker believes that Webjet’s medium-term outlook is looking stronger. UBS believes that Webjet may be able to increase its market share.

According to UBS, Webjet shares are valued at 19x FY23’s estimated earnings.

A few weeks ago the ASX travel share told investors that its divisions had been profitable before the lockdowns in Australia and New Zealand. The WebBeds business was profitable in July and August, it was also on track to be profitable in September. WebBeds has seen strong demand as travel restrictions ease in North America and Europe. Management suggested this showed significant upside as more international markets reopen.

Its online travel agency and Online Republic businesses were profitable in April and May, but both have been impacted by lockdowns. Webjet believes that both businesses will return to profitability as soon as domestic markets reopen.

Webjet thinks that it can expand into new market segments and benefit from customers buying travel online. Management said the business is on track to reduce costs by at least 20% once the company gets back to scale. Once markets reopen, Webjet thinks it will have lower costs and greater profitability.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel is currently rated as a buy by the broker Morgans, with a price target of $25.25.

Morgans was attracted to the Corporate Travel Management’s last few months of FY21 which revealed a good performance in the northern hemisphere. Market share growth and a return to profitability in the second half of FY21 were highlights.

In the second half of FY21, the ASX travel share generated underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.1 million, with $13.6 million of positive EBITDA generated in the fourth quarter of FY21.

The business points to the acquisition of Travel & Transport in the US as a very helpful reason why it will be a much larger business after COVID travel restrictions are removed. It thinks it’s now the fourth largest corporate travel business in the world.

In North America, FY21 fourth quarter revenue increased 47% to $39.6 million compared to the third quarter result.

Corporate Travel Management managing director Jamie Pherous said:

Through our recent acquisitions, realised synergies and permanent reductions of our cost base we expect the business will deliver material accretion to group earnings after COVID-19.

According to Morgans, the Corporate Travel Management share price is valued at 22x FY23’s estimated earnings.

The post 2 ASX travel shares to consider buying appeared first on The Motley Fool Australia.

Should you invest $1,000 in Webjet right now?

Before you consider Webjet, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Webjet wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Is it too late to buy Qantas (ASX:QAN) and other ASX travel shares?
To buy, hold or sell? Experts weigh in on the Webjet (ASX:WEB) share price
Why the Webjet (ASX:WEB) share price has soared 24% in 4 weeks
Is the Corporate Travel (ASX:CTD) share price a buy right now?
These are the 10 most shorted ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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