Australia’s tourism shares are going bananas

Whether it’s the influx of overseas tourists or Australians travelling more domestically, it’s proving a boon for a number of ASX listed tourism companies.

Skydive The Beach Group Ltd (ASX: SKB) saw its share price gain 5% yesterday and are now up 30% since mid-July, partly as a result of strong financial results. The company operates a number of Skydiving operations around Australia and has recently expanded into New Zealand with two acquisitions. As a result, tandem jumps were up 126% in the 2016 financial year, resulting in earnings before interest, tax, depreciation and amortisation (EBITDA) more than doubling to $13.5 million.

The company says it expects the strong business momentum to continue into the 2017 financial year.

Sealink Travel Group Ltd (ASX: SLK) operates the only commercial ferry to Kangaroo Island in South Australia as well as Captain Cook Cruises and a number of other commercial ferry operations. Its share price is up 12.4% in the past month to $4.63 after the company announced a 140% increase in underlying net profit to $23.1 million. In the past year, Sealink’s share price is up more than 88%.

Lower oil prices are helping too, with Sealink ferries consuming nearly 10 million litres of fuel in 2016.

The company says it is well placed for sustainable future growth as it focuses on improving yields and margins, cost saving opportunities and efficiencies, and additional ferries on Sydney Harbour.

Ardent Leisure Group (ASX: AAD) has seen its share price jump 19% in the past two weeks, after the company announced it was selling its Health Clubs division (mainly Goodlife gyms) to Quadrant private equity for $260 million, and then shortly after reporting a 32% increase I net profit after tax to $42 million. The huge US potential for its Main Event family entertainment centres could see Ardent generate strong growth for many years to come.

The company also owns and operates the Dreamworld and Whitewater World theme parks on the Gold Coast and the division saw a 13% increase in attendance numbers in 2016 to 2.4 million visitors.

Foolish takeaway

Increasing globalisation and more tourists coming to Australia are strong tailwinds for the companies above – although they do appear to be trading at reasonably expensive prices currently. Foolish investors may want to wait for a pullback in prices before dipping their toes in.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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