I'm sure most readers will have heard the term "Don't put all of your eggs in one basket." I believe that this simple proverb is especially important when it comes to investing.
You only have to look at the decline of mining giants BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) in the last five years to see why diversification is important when investing.
Had you invested all your money in these two shares five years ago you would have lost over half of your money today. It certainly can take a long time to recover from losses of that size.
This brings us to Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB).
Both shares have been performing very strongly this year, but in order to maintain a diverse portfolio, I believe it is wise to hold just one them. But which one is the better investment today?
As a shift from bricks-and-mortar to online bookings takes place, Webjet is positioned well to attempt to steal market share away from Flight Centre. But despite this I still believe that Flight Centre is the better long-term investment out of the two.
Flight Centre recently reported an impressive interim profit result which saw total transaction value of $9.2 billion for the period. This was an increase of 12.8% year-over-year and came as a result of all of its 10 operating regions posting record results.
The diversification and strength of Flight Centre's business sets it apart from Webjet in my opinion. Bricks-and-mortar may be in decline, but it is still an incredibly profitable segment which Webjet is missing out on.
Flight Centre's recent acquisition of BYOjet will help it compete online and should prove to be strong competition for Webjet and Expedia in the future. Management has stated it intends on growing BYOjet through metasearch sites such as Skyscanner. I feel this will help grow the brand in the next year or two.
Now this doesn't mean that I think Webjet is a bad investment. Quite the contrary. I believe it will also provide its shareholders with good returns in the future. I just feel that given the choice of the two, Flight Centre is the better investment at present.
