As investors, we are geared to be constantly looking forward. The mentality is to always be on the lookout for the next market shift that might create an investment grade stock, or a disruptive trend that might affect your existing portfolio.
But that forward-looking bias can mean that long-term trends that take a while to filter through to businesses are ignored. There's a glaring example of this currently at work.
One year ago today, the Australian dollar was buying 0.93 USD. Today, it will buy you 0.73 USD. That is more than 20% lower. For all the talk about the falling Australian dollar from our point of view as consumers and travellers, the 20% fall has a very important effect on another key demographic: inbound international tourists.
But currency factors take a while to filter through to the decision-making processes of those tourists. It will take time to shift the perception that Australia is a high-cost destination to holiday.
But when it does, these two stocks are poised to benefit.
A stock for the high flyers
For a long time, Sydney Airport Holdings Ltd (ASX: SYD) was viewed as a defensive "utility" type stock and was lumped in with the toll roads and pipeline operators of the ASX. However, a more holistic view of the business shows that it is probably one of the best long-term growth stocks on the ASX.
That's because the earnings of Sydney Airport are directly correlated with the inbound tourism traffic that passes through its gates, and Sydney is the most popular destination of choice for inbound travellers.
The recently disclosed traffic numbers are evidence of this, with close to 19 million arrivals in the first half of 2015 alone. The highest growth rates were from citizens from China (18.6%) and the United States (15%). Both are large markets with millions of potential visitors likely to be attracted by a lower dollar and increased spending power when they arrive here, which bodes well for the future earnings growth of Sydney Airport
A stock for the seafarers
Sealink Travel Group Limited (ASX: SLK) is a relatively recent addition to the ASX, with a well-received 2013 IPO. Since then the share price has grown strongly as more investors became aware of its attractive qualities.
The company is an operator of services for several high traffic ferry routes. The largest revenue and profit generators for Sealink are in South Australia with several daily trips to Kangaroo Island as well as the iconic Captain Cook Cruises on Darling Harbour in Sydney
The Kangaroo Island route is of particular interest, as Sealink has a virtual monopoly on ferry services to the popular tourist destination. As well as tourist trips, the company also services the local population of the island when they visit the mainland, and those who work on the island.
Captain Cook Cruises in Sydney operates in a more competitive market, but investing in higher quality ferries with more amenities, adding new routes and a refined marketing strategy have all contributed to strong recent results.
Half year results were 37% ahead of the previous period, while revenue grew by only 9%. This is a good sign, and typical of businesses with fixed cost bases, where only limited incremental investment is required to increase earnings.
The company also has additional growth levers to pull with operations established in Queensland and Northern Territory markets, which includes the Whitsundays, Barrier Reef and Tiwi Islands.
The other tailwind behind the company is the rapidly falling cost of diesel. As the fuel costs decrease and the fuel hedging contracts entered into by the company expire, the benefits will flow through to the bottom line. Sealink could feel a similar benefit to the one recently experienced by Qantas Airways Limited (ASX:QAN) that has seen the share price of the flying kangaroo soar as their fuel bills plummeted.
