2 ASX travel shares to consider buying

Webjet and Corporate Travel could be good ASX share options.

| More on:
a happy passenger sits in her airplane seat with boarding pass in hand smiling widely at the prospect of travelling with ASX 200 travel shares rise today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The ASX travel share sector could be a good place to look for recovery ideas as earnings start heading into profitable territory again.

It has been a difficult 18 months for the ASX travel share sector with limited travel, restrictions and big losses.

However, there may be light at the end of the tunnel with talk of borders reopening and a growing number of people being vaccinated – bringing the opening up targets of NSW and VIctoria closer.

With that in mind, these two ASX travel shares could be ones to consider:

Webjet Limited (ASX: WEB)

Webjet is currently rated as a buy by the broker UBS with a price target of $6.35. The broker believes that Webjet's medium-term outlook is looking stronger. UBS believes that Webjet may be able to increase its market share.

According to UBS, Webjet shares are valued at 19x FY23's estimated earnings.

A few weeks ago the ASX travel share told investors that its divisions had been profitable before the lockdowns in Australia and New Zealand. The WebBeds business was profitable in July and August, it was also on track to be profitable in September. WebBeds has seen strong demand as travel restrictions ease in North America and Europe. Management suggested this showed significant upside as more international markets reopen.

Its online travel agency and Online Republic businesses were profitable in April and May, but both have been impacted by lockdowns. Webjet believes that both businesses will return to profitability as soon as domestic markets reopen.

Webjet thinks that it can expand into new market segments and benefit from customers buying travel online. Management said the business is on track to reduce costs by at least 20% once the company gets back to scale. Once markets reopen, Webjet thinks it will have lower costs and greater profitability.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel is currently rated as a buy by the broker Morgans, with a price target of $25.25.

Morgans was attracted to the Corporate Travel Management's last few months of FY21 which revealed a good performance in the northern hemisphere. Market share growth and a return to profitability in the second half of FY21 were highlights.

In the second half of FY21, the ASX travel share generated underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.1 million, with $13.6 million of positive EBITDA generated in the fourth quarter of FY21.

The business points to the acquisition of Travel & Transport in the US as a very helpful reason why it will be a much larger business after COVID travel restrictions are removed. It thinks it's now the fourth largest corporate travel business in the world.

In North America, FY21 fourth quarter revenue increased 47% to $39.6 million compared to the third quarter result.

Corporate Travel Management managing director Jamie Pherous said:

Through our recent acquisitions, realised synergies and permanent reductions of our cost base we expect the business will deliver material accretion to group earnings after COVID-19.

According to Morgans, the Corporate Travel Management share price is valued at 22x FY23's estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Travel Shares

Happy couple looking at a phone and waiting for their flight at an airport.
Travel Shares

Flight Centre share price higher on acquisition news

The travel agent is betting big on cruises. Here's what you need to know.

Read more »

Woman on a tablet waiting in for her flight in an airport and looking through a window.
Travel Shares

Is now the time to cash in some gains on Qantas shares?

After a stellar year of gains, are Qantas shares flying into headwinds?

Read more »

Couple at an airport waiting for their flight.
Travel Shares

What big news is driving Qantas shares higher on Friday?

The Flying Kangaroo has provided the market with an update today. Let's see how it is performing.

Read more »

A young girls clings in fright to a big red slide.
Travel Shares

Should you buy the 43% October slide on WEB Travel shares?

Is this an opportunity or a trap?

Read more »

Man waiting for his flight and looking at his phone.
Travel Shares

The Flight Centre share price just hit a 52-week low, is it a buy?

Is this stock about to take flight or keep dropping lower?

Read more »

A woman on holiday stands with her arms outstretched joyously in an aeroplane cabin.
Travel Shares

Big ASX news: Qantas share price hits record high

Qantas is defying the market to fly to new heights this Wednesday...

Read more »

Man sitting in a plane seat works on his laptop.
Travel Shares

Qantas share price U-turns amid danger of a $150 million bill

The airline could be up for another hefty bill.

Read more »

Paper aeroplane going down on a chart, symbolising a falling share price.
Travel Shares

Why did the Flight Centre share price just crash 17%?

Flight Centre shares are getting hammered on Friday. But why?

Read more »