There are many different strategies of how to invest. One key strategy can be to identify long-term tailwinds that will boost a business or even a whole industry.
Tourism is a big part of the Australian economy. Tourists are willing to see the sights and spend the money on accommodation and travel.
Here are four businesses that should benefit from the tourism boom over the coming years:
Sydney Airport Holdings Ltd (ASX: SYD) manages Sydney Airport. Every month it reports that international passengers are growing at an impressive rate, particularly from Asia.
All of the international tourists have to fly into an airport and they’re most likely going to pick Australia’s biggest city to fly into.
Sydney Airport is currently trading at 37x FY17’s estimated earnings with an unfranked dividend yield of 4.7%.
Crown Resorts Ltd (ASX: CWN)
Crown is the owner of the casino & hotel resorts in Melbourne and Perth. Some tourists will want to gamble or stay at the city’s most luxurious hotel, which is exactly what Crown offers.
The business is also building another complex at Sydney’s Barangaroo and adding another hotel to its Melbourne complex over the next decade.
Crown is currently trading at 23x FY17’s estimated earnings with a committed future partially franked dividend yield of 4.9%.
Mantra Group Ltd (ASX: MTR)
Mantra is the owner of the hotel chain of the same name which operates in Australia and in other countries too.
A lot of tourists will want to stay at a quality hotel without breaking the bank to do so. Mantra hotels are a great middle range option, which is why its number of guests could continue to rise.
Mantra is currently trading at 17x FY17’s estimated earnings with a grossed-up dividend yield of 4.92%.
Auckland International Airport Ltd (ASX: AIA)
This is the entity that runs Auckland Airport. New Zealand is going through a similar tourism boom as Australia, perhaps an even greater one.
Auckland Airport is similar to Sydney Airport in that it acts as the main airport for the biggest city in the country. The airport is also reporting a large increase in passenger numbers and I expect this to continue.
Auckland Airport is currently trading at 35x FY17’s estimated earnings with an unfranked dividend yield of 2.63%
I think all four companies could see long-term growth thanks to tourism tailwinds. None of them are among my favourite businesses but I can see why investors like them.
Mantra is trading at the cheapest on conventional metrics but Auckland Airport and Crown are my favourite businesses of the four.
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Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia owns shares of Crown Resorts Limited and Sydney Airport Holdings Limited. 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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