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.

More reading

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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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The G8 Education Ltd (ASX: GEM) share price has been a strong performer this morning and is trading notably higher.

At the time of writing the childcare centre operator’s shares are up over 6% to $1.10. This compares favourably to an impressive 3.1% gain by the S&P/ASX 200 Index (ASX: XJO).

Why is the G8 Education share price outperforming?

The catalyst for this outperformance has been an announcement this morning in response to one by the Federal Government on Monday.

The latter announcement revealed that the government intends to end its free childcare scheme in July and reintroduce the Child Care Subsidy (CSS). It will also bring to an end its JobKeeper payment for workers in the sector next month.

While you might imagine this to be a negative, it won’t actually be for G8 Education. This is because there will be a three-month transition period that aims to support the early learning sector during a period of reduced occupancy levels.

According to G8’s announcement, early learning and care providers, including G8, will receive a transition payment equal to 25% of each centre’s fee levels prior to the impact of the pandemic. This is based on fees received in the fortnight prior to 1 March 2020.

Management revealed that this equates to approximately half of the amount received under the relief package, but will be paid in addition to the normal CCS and co-parent payments. Though, this transition payment is conditional on early learning and care providers maintaining average gross employment levels during this period.

Another positive is that the Federal Government will ease the activity test requirements that determine a family’s access to the CCS. Management expects this to make early learning more accessible and affordable to certain families. This includes those whose employment has been impacted due to the pandemic.

G8 Chief Executive Officer and Managing Director, Gary Carroll, commented: “The transitional arrangements announced today are welcome as they provide operators with increased flexibility to support families as the economy recovers. We look forward to continuing to engage with government and other stakeholders to ensure the right settings are in place to support our families and team members.”

What will be the financial impact?

Management notes that the revised government support packages are structured in a way that means G8 expects to be in no worse a position relative to the prior support measures.

This is even if occupancy levels become more subdued than they currently are.

Occupancy levels update.

The company also revealed that its booked occupancy rate is currently ~65%. However, physical attendance is approximately 52%, as some parents continue to choose to keep their children at home despite having a booking at a centre.

During May, physical attendance improved ~20 percentage points off the April low of ~30%.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX childcare shares unlikely to receive support beyond June
• These 10 ASX 200 shares have fallen the most over the last year

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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