After a tough couple of years, Flight Centre Travel Group Ltd (ASX: FLT) shares are riding high, offering dividends, and analysts are again forecasting growth.
Flight Centre Shares Reach Cruising Altitude
Over the long-term, Flight Centre shares have been one of the ASX's standout performers.
As storefronts popped up in shopping centres and just about every strip of shops throughout Australia the company's profits began to swell. More recently, an expansion into the UK and USA was well received by investors.
However, a few years ago some investors became concerned that Flight Centre's bricks-and-mortar approach to travel retailing was destined to be disrupted in the digital age. The likes of booking.com, Wotif and Webjet Limited (ASX: WEB) have become household names in online travel bookings.
Nevertheless, with Flight Centre's recent resurgence the company has come back onto the radar of investors. Here's two reasons why I have it on my watchlist:
- Dividends. At today's prices, Flight Centre shares are expected to yield 3.1% fully franked. Given its track record and solid balance sheet, I suspect it will continue to pay dividends into the future.
- Growth. According to analysts, Flight Centre will grow its profits modestly in coming years. While I would never rely solely on sell-side analyst forecasts, I think the forecasts are reasonable. Together with its conservative valuation, I'm happy to reserve a spot for Flight Centre on my watchlist.
Foolish Takeaway
A few years ago, when I bought Flight Centre shares (I've since sold them), I said Flight Centre had enough cash to buy Webjet. Webjet is now four times the size!
While the threat of online disruption is real, I think there is a place for Flight Centre's offering so I'm not actively betting against it. However, I would need a more compelling valuation to buy shares today.
