The market is running hot and it's the Flight Centre Travel Group Ltd (ASX: FLT) share price and Webjet Limited (ASX: WEB) share price that's rebounding strongly.
The S&P/ASX 200 Index (Index:^AXJO) rallied nearly 2% at the time of writing to break a four-day losing streak.
The market was sold off on resurging global COVID-19 worries but bargain hunters couldn't help themselves today.
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Biggest losers have most to gain
This explains why the pandemic-stricken travel sector is seeing some of the best comebacks, especially with some experts voicing hope for a vaccine in 2021.
The ASX stocks most heavily sold-off during COVID will logically be the ones leading any recovery (assuming they survive). It's clear that value buyers are trying to get on this trade early.
The FLT share price surged over 5% to $13.51 in the last hour of trade while the WEB share price gained 2.5% to $3.67.
FLT share price and WEB share price not alone in rebound
They aren't alone. The Qantas Airways Limited (ASX: QAN) share price flew 3.6% higher at $3.90 and Sydney Airport Holdings Pty Ltd (ASX: SYD) rose 3.7% to $5.74.
Six months from now, we could be looking back and wishing we bought travel stocks during the September sell-down.
This is despite the fact that international borders are unlikely to reopen fully till late 2021, if not 2022.
Easing border restrictions boosting confidence
But news that South Australia is welcoming News South Wales residents with open arms is giving investors just enough optimism to refuel the rally.
Meanwhile, the 14-day rolling average of new COVID-19 cases in Victoria dropped below 30. There's talk that Queensland premier Annastacia Palaszczuk will be under intense pressure to allow Victorian holiday makers back in sooner rather than later as her government is facing a huge budget deficit.
The Flight Centre share price and Webjet share price may be more dependent on international travel, but the removal of state border restrictions may be enough to keep them in the air.
Should you buy Flight Centre and Webjet?
Both stocks have lost around 70% of their value since the start of calendar 2020. This compares to the 47% dive by the QAN share price and a 13.5% decline by the ASX 200.
Lucky for these stocks, recent emergency capital raisings means they should have enough of a cash runway to ride out the COVID mayhem.
I would even hazard a guess and say there could be merger and acquisition upside for both. Nothing like a crisis to force mergers, and there have been stranger bedfellows.
But be forewarned, buying these ASX COVID casualties aren't for the faint hearted. These stocks are likely to face more turbulence than many other parts of the market for a while yet!
