There aren’t many genuine tailwinds that businesses can truly benefit from. Some are temporary and some aren’t really tailwinds.
However, there is a clear tourism tailwind with the number of international visitors that come to Australia and New Zealand each year. Sydney Airport Holdings Ltd (ASX: SYD) reports the growth each month and in the latest monthly update for August it revealed a 8.3% growth in international passengers.
There are several businesses that can benefit from this trend, here are two of them that I want to buy:
Crown Resorts Ltd (ASX: CWN)
Crown Resorts is one of the largest entertainment companies in Australia.
It owns large casino resorts in Melbourne and Perth and has another one planned for Sydney. It also has started the process of adding another hotel to the Melbourne complex.
Crown has suffered a lot in recent years but I think it’s reached the bottom now and could do quite well over the next few years with initiatives like Crownbet starting to pay off.
Crown is currently trading at 20x FY18’s estimated earnings with a committed partially franked dividend yield of 5.35%.
Auckland International Airport Ltd (ASX: AIA)
Auckland Airport is the main gateway arriving into New Zealand.
New Zealand is perhaps going through an even bigger tourist boom than Australia is.
In its August update Auckland Airport revealed that the number of international passengers grew by 4.6%.
Auckland Airport is currently trading at 31x FY18’s estimated earnings with an unfranked dividend yield of 3.18%.
Both businesses are worth owning but Crown looks like the clear winner to me at the moment with its share price down to $11.21.
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Returns As of 6th October 2020
Motley Fool contributor Tristan Harrison has no position in any of the 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.