Despite the challenges of the pandemic, Sydney Airport is attracting investors.
The post Why the Sydney Airport (ASX:SYD) share price has beaten the ASX 200 in the last year appeared first on The Motley Fool Australia. –
At the close of trade on Friday, shares in Australia’s international gateway were trading for $7.90 – up 1.94%. The S&P/ASX 200 Index(ASX: XJO), meanwhile, finished the day 0.04% lower. Over 12 months, however, Sydney Airport shares are outpacing the ASX 200 by 22 percentage points (+44% vs. +22%).
Let’s take a closer look and see what’s going on.
Sydney Airport shares have taken off since last-year
The market, and in particular ASX travel shares, were coming off a particularly low base in late August 2020. The pandemic became a crisis only 5 months prior and Victoria was in the midst of what seemed to be a never-ending lockdown.
One possible reason for the Sydney Airport share price gains may be renewed optimism in the market. Vaccines are widely available and there is hope Australia’s international borders will open sooner rather than later.
Sydney Airport isn’t the travel company to see large gains in 52-weeks. The Qantas Airways Limited (ASX: QAN) share price is up 33.7% in that time whilst Webjet Limited (ASX: WEB) shares are 55.2% higher. A combination of a low starting price 1-year ago and increased investor expectations for travel shares could be fuelling this gain.
What else sent the Sydney Airport share price higher?
Another possible reason for the buoyant Sydney Airport share price may be the $23 billion takeover bid the company received in July.
On the day of the announcement, Sydney Airport shares rocketed 37% to $7.78 each. Since then, shares have gone even higher – reaching a new 52-week high of $8.04 at one point. The company’s board ultimately rejected the bid, claiming it “undervalued” the company and was “opportunistic”.
The consortium took a second bite of the cherry 2 weeks ago, but this bid too was dismissed.
If history is any guide, if restrictions on travel (both internationally and interstate) aren’t lifted when expected, it could signal trouble for the Sydney Airport share price. Qantas is planning for international travel by the end of this year (when Australia is expected to hit 80% fully vaccinated). If we do hit that target, it will be up to the government to follow through on the plan.
While the Sydney Airport share price is up from this time last year, it is still below pre-pandemic levels. On the first day of 2020, Sydney Airport shares were trading for $8.44.
Sydney Airport Holdings has a market capitalisation of roughly $21 billion.
Should you invest $1,000 in Sydney Airport right now?
Before you consider Sydney Airport, 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 Sydney Airport wasn’t one of them.
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*Returns as of August 16th 2021
If you invested $1,000 in Sydney Airport (ASX:SYD) shares a decade ago, here’s what it would be worth now
What Sydney Airport’s results could mean for Flight Centre (ASX:FLT) shares
What could Sydney Airport’s results mean for Webjet (ASX:WEB) shares?
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Motley Fool contributor Marc Sidarous 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.