Stock Pick

  • Is the Flight Centre share price a bargain buy?

    flight centre share price

    Despite its strong form over the last couple of months, the S&P/ASX 200 Index (ASX: XJO) is still trading around 19% lower than its February highs.

    While this is disappointing, this isn’t a bad result compared to some shares on the index.

    The Flight Centre Travel Group Ltd (ASX: FLT) share price has been a particularly poor performer this year. The travel agent’s shares are down 69% from their 52-week high.

    Why is the Flight Centre share price down 69% from its high?

    Investors have been selling the travel agent’s shares due to the impact the pandemic has had on the global travel market.

    For example, during April the company’s total transaction value (TTV) was tracking at approximately 5% to 10% of normal levels.

    The good news, though, is that Flight Centre has been cutting its costs materially to combat this.

    Last month management revealed that it was making strong progress towards reducing its global cost base down to its $65 million per month target. This should mean the company has more than enough liquidity to ride out the storm.

    Is the Flight Centre share price a bargain buy?

    While Flight Centre could prove to be a good long term investment, I wouldn’t be in a rush to invest.

    This is because, although I’m optimistic that domestic tourism will start its recovery in the coming months, it will take some time before the local travel market returns to normal.

    Furthermore, it will take even longer for international tourism to return to normal levels.

    In light of this, I think the company has a tough couple of years ahead of it. As such, I wouldn’t expect its profits to return to previous levels any sooner than FY 2022, but possibly later.

    For the same reasons, I’m not in a rush to buy Webjet Limited (ASX: WEB) shares either just yet.

    Instead of Flight Centre and Webjet, I think these highly rated shares are the ones to buy right now…

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    One is a diversified conglomerate trading over 30% off it’s all-time high, all while offering a fully franked dividend yield of over 3%…

    Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. 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.

    The post Is the Flight Centre share price a bargain buy? appeared first on Motley Fool Australia.

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  • Where should you invest $1,000 in ASX shares?

    Pile of $100 notes, asx 200 shares

    Want to know where to invest $1,000 into ASX shares?

    The ASX has performed strongly since that initial coronavirus share market sell-off. Some share performances have been too strong in my opinion, so I’d leave those ASX shares to one side.

    Investing $1,000 of your hard-earned money is an important job. You don’t want to throw it away on the wrong investments. Only go for the best ASX ideas. 

    Here is a growth idea and a dividend idea:

    ASX growth share: Pushpay Holdings Ltd (ASX: PPH)

    I think Pushpay is one of the most promising ASX shares. It’s an electronic donation business that’s currently focused on the large and medium churches in the US. This is such a large sector that Pushpay thinks this is a $1 billion revenue opportunity.

    The ongoing coronavirus pandemic is terrible. But Pushpay is helping churches through this. The Pushpay technology enables churches to livestream to their congregations. Electronically donating is obviously also on the rise in a period of social distancing.

    Pushpay is expecting that earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to approximately double over the course of FY21. That would be a very strong result from the ASX share. And that’s just one year. It’s expecting to achieve higher gross margins over time. 

    I’m not expecting Pushpay to become a major player in anything other than the US church sector. But if it could grow into other donation areas, that would further increase its growth potential.

    ASX dividend share: Brickworks Limited (ASX: BKW)

    I think Brickworks is an undervalued ASX dividend share. It owns a large amount of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which provides reliable earnings and growing dividends

    Brickworks also owns a 50% stake in an industrial property trust along with Goodman Group (ASX: GMG). Industrial properties should be in even more demand due to the rapid shift to ecommerce due to the coronavirus.

    Most people would know Brickworks as a building products business. It’s certainly tough to be in construction right now. But there is plenty of talk of government support for the sector. And demand for construction will return in the future.

    In the meantime Brickworks is making use of the shutdowns to accelerate its plans in the US and it has closed one of its plants.

    Brickworks is trading cheaply compared to its asset value. It hasn’t decreased its dividend for over 40 years and currently offers a grossed-up dividend yield of 5.2%.

    Foolish takeaway

    I think that both of these ASX shares have a strong potential to deliver very good returns over the next few years. Over the next five years I believe that Pushpay could deliver very impressive earnings growth. But Brickworks could provide a very solid dividend as well.

    If I had another $1,000 I’d want to put it into one of these leading ASX shares…

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    Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, PUSHPAY FPO NZX, and Washington H. Soul Pattinson and Company Limited. 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.

    The post Where should you invest $1,000 in ASX shares? appeared first on Motley Fool Australia.

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  • Lufthansa Gains Following Breakthrough on $10 Billion Bailout

    Lufthansa Gains Following Breakthrough on $10 Billion Bailout(Bloomberg) — Deutsche Lufthansa AG shares surged after Europe’s biggest airline overcame most of the barriers to receiving a 9 billion-euro ($10 billion) bailout from the German government.The stock gained as much as 8.3% and was priced 6.6% higher at 9.75 euros as of 9:04 a.m. Tuesday, the first day of trading on the Frankfurt bourse since last week.Barriers to the rescue began to crumble late Friday, with Lufthansa agreeing to hand over operating slots at its main hubs to win European Union backing for the deal. Its supervisory board approved the compromise in a vote on Monday.Lufthansa is seeking emergency aid after the Covid-19 pandemic punctured a decades-long aviation boom, grounding flights and draining cash reserves. The company expects its fleet to be 100 aircraft smaller following the crisis, implying the loss of 10,000 jobs.While investors still need to vote on a package that will dilute their holdings at a meeting on June 25, analysts say they’re likely to grant their approval rather than see Lufthansa slide toward insolvency.The EU still has to approve other aspects of a deal that will make Germany Lufthansa’s biggest shareholder, thrusting the state back into the heart of company privatized with fanfare over two decades ago.Under the compromise with the EU, Lufthansa will reduce its presence in Frankfurt and Munich by four aircraft apiece and surrender enough slots for 12 daily return flights, offering new challengers a toehold at its fortress hubs.Lufthansa will publish first-quarter earnings on Wednesday.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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