Which ASX 200 travel share has already taken off by 48% in 2023?

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surgesA woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges

ASX 200 travel share Flight Centre Travel Group Ltd (ASX: FLT) is soaring in 2023, gaining 48.3% already in the year to date.

Flight Centre shares closed the session on Friday at $21.34, up 1.4% for the day and 7.2% for the week.

While it hasn’t been a straight line of growth, Flight Centre is outperforming fellow major ASX 200 travel shares by a long shot.

However, all of them have ascended impressively this year as the COVID recovery for airlines and travel agencies continues around the world.

As you can see below, Corporate Travel Management (ASX: CTD) is the second-best performer this year among these five major ASX travel shares, with 41.3% growth since 3 January.

This compares to a 4% bump for the S&P/ASX 200 Index (ASX: XJO) since the year began.

So why are Flight Centre shares doing better than the other ASX 200 travel shares?

Let’s investigate.

Why is Flight Centre the fastest-rising ASX 200 travel share?

It could be argued that Flight Centre is simply catching up following lacklustre price growth in CY22.

The Flight Centre share price fell 18% over the calendar year, while Webjet Limited (ASX: WEB) shares screamed ahead by 20%.

Corporate Travel Management shares did worst in CY22, falling 33% over the calendar year.

But 2023 has brought new horizons.

Driving Flight Centre’s performance this year has been a series of positive announcements, some of which have nothing to do with the COVID recovery that is obviously benefitting all ASX 200 travel shares.

The big one came in January when Flight Centre announced the acquisition of UK-based luxury travel brand Scott Dunn for $211 million.

Investors loved it, and the Flight Centre share price soared 15% on the news.

The share purchase plan (SPP) that helped fund the purchase was way oversubscribed, so much so that the company upped the capital raise from $40 million to $60 million so more people could participate.

The applications totalled $350 million, so most applicants received a vastly scaled-back allocation so Flight Centre could spread the love.

And at an SPP price of $14.60, all those shareholders have made a significant capital gain since the new shares began trading in March. In fact, they gained 25% in value in the first week.

Flight Centre shares gained 6.7% this week while the other four major ASX 200 travel shares fell.

On Wednesday, Flight Centre updated its guidance and reported a record-breaking month for March.

Total transaction value (TTV) on its leisure and corporate legs surpassed $1 billion for the first time ever.

How long can Flight Centre shares keep climbing?

Interestingly enough, Flight Centre is the most shorted ASX share on the market today.

As we reported last Monday, 11.7% of Flight Centre’s capital is shorted. That means a significant number of professionals are laying bets that the Flight Centre share price will fall.

As my Fool colleague James explained, the shorting is likely due to concerns that airlines may not be offering as much margin to travel agents due to a lack of competition.

But ASX investors are obviously enthusiastic about the stock. No ASX share ascends by almost 50% in a tad over four months if investors are feeling indifferent or dubious.

What do the experts think?

There’s by no means a consensus among brokers covering this ASX 200 travel share today.

According to Westpac Trading, there are 17 brokers covering Flight Centre shares.

Seven brokers have a strong buy rating, seven say hold, one has a moderate sell rating, and two say the ASX 200 travel share is a strong sell.

As we reported, Morgans has raised its rating on Flight Centre shares following the company’s quarterly update last week.

The broker has given Flight Centre shares an add rating with a significantly improved 12-month price target of $26.25. This implies a 23% potential upside based on Friday’s closing price.

Morgans also expects the company to resume paying dividends in FY24. The broker tips a 50-cent per share dividend in FY24 followed by an 88-cent per share dividend in FY25.

Based on Friday’s closing price, that’s a dividend yield of 2.34% in FY24 and 4.12% in FY25.

Flight Centre dividends have always carried full franking credits, too.

The last time Flight Centre paid a dividend was in October 2019, before the COVID pandemic hit in early 2020.

In CY19, the ASX 200 travel share paid an annual total of $4.3857 in gross (including franking) dividends.

Back then, Flight Centre stock was trading in the low to mid $40 range.

Flight Centre is inching closer to its 52-week high of $21.82, reached on 5 May 2022.

The post Which ASX 200 travel share has already taken off by 48% in 2023? appeared first on The Motley Fool Australia.

FREE Guide for New Investors

Despite what some people may say – we believe investing in shares doesn’t have to be overwhelming or complicated…

For over a decade, we’ve been helping everyday Aussies get started on their journey.

And to help even more people cut through some of the confusion “experts’” seem to want to perpetuate – we’ve created a brand-new “how to” guide.

Yes, Claim my FREE copy!
*Returns as of April 3 2023

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Motley Fool contributor Bronwyn Allen has positions in Flight Centre Travel Group. 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 Corporate Travel Management and Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/JRPxOjt

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s