Insights

Is the reopening already priced into ASX 200 travel shares?

Most Australians are eager to resume domestic and international travel.
The post Is the reopening already priced into ASX 200 travel shares? appeared first on The Motley Fool Australia. –

S&P/ASX 200 Index (ASX: XJO) travel shares are putting in a mixed performance today.

Webjet Ltd (ASX: WEB) has dipped into the red, currently down 0.35% to $5.67 per share.

The Qantas Airways Ltd (ASX: QAN) share price, meanwhile, is lifting. Qantas shares are up 0.29% to $5.275 per share.

This comes as the S&P/ASX 200 Index (ASX: XJO) is holding onto its own gain of 0.65%.

That’s today’s price action.

But with Australia looking to reopen domestic and international travel, what’s the outlook for ASX 200 travel shares for 2022?

For some expert insight into that question we turn to Paul Xiradis, head of equities at Ausbil Investment Management.

Another year of strong earnings growth

According to Xiradis, “The outlook for FY22, particularly from late calendar 2021, is for another year of strong earnings growth from select cyclicals…”

Xiradis noted this is particularly true for companies exposed to services, including ASX 200 travel shares:

We are of the view that forward estimates for the next two years will be upgraded, driven by an under-appreciated pick-up in activity beyond COVID lockdowns.

The December quarter ’21 is shaping up to be a very strong period, making up for the lockdown-induced slowing in the September quarter. We expect activity levels will remain elevated for the whole of calendar year ’22, before it starts its march to trend growth commencing in ’23.

We do not believe Australian equities are too expensive on average when you consider them in relative terms against where long-term interest rates are sitting, and their forward earnings growth outlook.

Drilling into the forward earnings per share (EPS) growth, Xiradis said, “We believe… some of the post-lockdown beneficiaries are offering strong potential EPS growth for FY22 relative to value.”

ASX 200 travel shares have certainly come to the fore as post-lockdown beneficiaries. Both the Qantas and Webjet share prices rocketed following the announcement of effective vaccines in November 2020. And shares again lifted off when Australia’s reopening plans were clarified amid high vaccination rates in August this year.

Yet, as Xiradis points out, there are risks to their continuing recovery. Notably, surrounding the unknowns of the virus:

Any resurgent re-infection issues or return to lockdowns and border closures would be a concern, however with vaccination rates so high we believe this risk of such is low. Furthermore, the breakthrough of a COVID-19 antiviral pill by Pfizer could be a game changer. There remains a slim risk that not all Australian states will deliver on vaccination targets, but we believe this risk is negligible.

Regarding the ASX 200 travels shares named above, Xiradis said, “Post-lockdown, with borders reopening we see positive earning growth outlooks for companies like Qantas [and] Webjet…”

How have these ASX 200 travel shares been performing?

The Qantas share price is up 8% so far in 2021 while fellow ASX 200 travel share Webjet has gained 11%. That compares to a 12% year-to-date gain posted by the ASX 200 itself.

Over the past month, Qantas shares have lost 7% and the Webjet share price is down 10%.

The post Is the reopening already priced into ASX 200 travel shares? appeared first on The Motley Fool Australia.

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

Before you consider Qantas, 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 Qantas 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

Are Webjet (ASX:WEB) shares still worth buying with travel opening up?

Here’s why the Webjet (ASX:WEB) share price is having a lousy start to the week

Here’s why ASX 200 travel shares are getting hammered today

ASX 200 (ASX:XJO) midday update: Lithium miners jump, Flight Centre tumbles

These are the 10 most shorted ASX shares

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

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!