Here's why it may be time to buy Flight Centre shares

Strong store growth in big travel markets is generating higher earnings.

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The ASX didn't have a May sell off this year, with the S&P ASX All Ordinaries Index (ASX: ^AORD) mostly trading sideways over the last two months. Still, some well known stocks have fallen in share price, like Flight Centre Travel Group Ltd (ASX: FLT).

Is the travel and holiday reservations company offering a discount to investors? The stock has dropped quickly since last week and is about 7% down in the last month. Value investors like to buy good companies at lower prices, especially when they look cheap compared to future growth potential.

Here's why we can look forward to business growth from this market leader and why it is a strong stock for any portfolio to have.

– Higher Aussie dollar

The Aussie dollar may be below parity with the US$, but a generally high exchange rate does benefit a travel company like Flight Centre. Australians travelling overseas have more buying power, so there is an incentive for vacationing internationally. Places like Europe are still recovering from the GFC, so average holiday prices can be cheaper to attract more tourists.

– International growth is moving ahead

Flight Centre has good exposure to foreign travel markets. In the US, it now has a 17-city presence in major cities like Miami, Atlanta and Boston. Its UK business is seeing strong earnings growth and its emerging Asia division achieved record earnings before interest and tax in the first half.

Corporate travel plays a very important role for the company, which it operates through its FCm Travel Solutions subsidiary. Business travel can generate higher profit margins and fees, so expanding its service offering in the big markets helps the company maintain its steady growth profile.

– Financial Performance

Group underlying net profit for the half year was up 14.1%. Shops numbers grew by 8.2% over the 12 months to 31 December. Shareholders received almost a 20% rise in interim dividends.

These great results spurred on a share price rally in February, but the recent slide may be just a temporary profit-taking sell off. As long as the stock's story is improving, share price weakness should be taken advantage of.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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