The Webjet Limited (ASX: WEB) share price rocketed 8.45% last week and has opened higher today. But will the Aussie travel share continue to head higher in 2020?
Is the Webjet share price a cheap buy?
It was a good week for the S&P/ASX 200 Index (ASX: XJO) which climbed 4.22% higher to 5,998.70 points.
Webjet was just one of many ASX 200 shares to climb higher as investors piled into shares.
There’s growing optimism about ASX travel shares like Webjet as coronavirus restrictions continue to ease.
It looks like there will still be some tough times ahead. However, many Aussies have been cooped up and are looking towards their next getaway.
Whether that is domestically or overseas, it’s good news for the Webjet share price. The ASX travel share is still down nearly 50% in 2020 which is a healthy discount. In contrast, the S&P/ASX 200 Index has fallen just 7.67% lower at the time of writing.
That could mean the Webjet share price is a bargain. However, it’s far from certain that we’ll see a quick share price recovery in 2020.
While airlines are starting to ramp up their flight numbers, capacity is still well down on where we started the year.
There’s also another issue: demand. Just because there’s the ability to travel, many Aussies have fallen on hard times during the pandemic.
There could be a couple of ways this plays out for the Webjet share price. There could well be a surge in demand as people take advantage of the ability to travel.
On the other hand, we could see more Aussies saving their cash and being conservative. There could also be some skepticism about travel safety despite more options being made available.
All these unknowns say to me that the Webjet share price could be cheap but it’s a speculative play as to where the travel industry is headed.
Foolish takeaway
The Webjet share price surged higher last week and has some strong momentum behind it in this week’s trade.
However, I feel the ASX travel share is far from a certain buy and I think I’ll wait until I see August earnings figures before jumping in.
Here are a few more cheap ASX shares to buy in the month ahead.
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As of 2/6/2020
More reading
- ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points
- Cheap ASX 200 retail shares to buy today
- These are the 10 most shorted ASX shares
- 3 quality ASX 200 shares to buy and hold until at least 2030
- ASX shares could be the best way to grow your wealth in 2020
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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.
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