Is Flight Centre Travel Group Ltd a buy after its latest acquisition?

The shares of Flight Centre Travel Group Ltd (ASX: FLT) will be on watch today after the travel agent announced a strategic investment in emerging travel company Ignite Travel Group.

Flight Centre has acquired a 49% minority interest in the Gold Coast-based company which specialises in the development and distribution of innovative leisure market models including exclusively curated holiday packages, travel vouchers, and rewards programs.

No financial details have been given regarding the deal, other than that Flight Centre will fund its purchase through the use of its own cash reserves.

According to the release Ignite Travel is expected to deliver over $100 million of total transaction value during FY 2017 thanks to the solid growth of its three key business units in both the B2B and B2C markets.

Its My Holiday Centre unit specialises in handcrafted and value added luxury package holidays across 14 specific destinations and sectors. The Holiday Exclusives unit sells exclusive, limited time travel vouchers that represent extreme savings to consumers. Finally, the RewardsCorp unit deploys patented models to design and implement unique rewards and promotions programs for corporate clients to offer to their customers.

The investment is expected to fast-track Ignite’s growth, while also providing Flight Centre’s suppliers with new distribution opportunities and customers with new product options.

Although I wouldn’t class this investment as a game-changer, I am pleased to see the company diversify its sales network. I believe this deal will increase its online footprint and go some way to helping it compete with its online travel agent rivals Webjet Limited (ASX: WEB) and Helloworld Ltd (ASX: HLO).

Whilst I wouldn’t necessarily invest purely on the back of this deal, I would consider investing in Flight Centre because of its cheap price and strong fully franked dividend. At present its shares are changing hands at just under 14x full year earnings and providing a fully franked 4.2% dividend. That could well make it a bargain in my opinion.

But before you make an investment in Flight Centre I would highly recommend you take a look to see if you have these three wealth destroying shares in your portfolio. 

3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.