A report by consultancy firm Deloitte gave a helicopter view of six ‘super sectors’ that will grow faster than the rest of the global economy. Australia has unique advantages pertaining to all of them. One of those sectors was tourism, which should benefit from the influx of increasing Asian visitors.
A prior report identified Sealink Travel Group (ASX: SLK) in particular and suggested that stocks worthy of equal consideration were Sydney Airport (ASX: SYD) for strong international passenger growth, Ardent Leisure (ASX: AAD) for rising attendance at its premium leisure assets, Flight Centre (ASX: FLT) for airfares within Australia and Crown (ASX: CWN) for casino patronage in Melbourne, Perth and ultimately Sydney.
Sealink yesterday rewarded investors in the float with a 37% first day return. The Managing Director Jeff Ellison told the Australian Financial Review that whatever worries are plaguing the wider world (such as the current US government shutdown), Sealink’s fundamentals and direction are the main drivers.
Two additional tourism-related stocks
- Echo Entertainment Group (ASX: EGP) for its exposure to Asian tourism to Queensland, where it holds three of the four casinos.
- Webjet (ASX: WEB) should benefit from its March 2013 acquisition of Zuji, an online travel agency dealing in air ticket sales in Hong Kong and Singapore. Additionally, it will prosper by enabling customers to build their own travel packages of not only flights but also accommodation, car rental and travel insurance.
The first point is to identify growth sectors and then invest in stocks within those sectors that have company specific advantages.
In spite of some very successful recent floats, caution is still advised in reviewing both the quality of management and the tendency of private equity firms selling out at inflated prices. The Myer (ASX: MYR) float is a case in point — a company operating in the wrong sector that was sold by the wrong type of vendor.
Finally, while the ship may have sailed on the Sealink float, the new ASX BookBuild facility is now an alternative for floats. This will allow ordinary investors to contact their own brokers and participate in the majority of new floats or capital raisings.
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Motley Fool contributor Mark Woodruff does not own shares in any of the companies mentioned in this article.