There are few genuine tailwinds that can sustainably boost a business’ earnings for several years. Ageing demographics is one and I think tourism is another.
Australia’s retiree population will be steadily hanging up their boots and keyboards over the next decade. The Asian middle class is wealthy and wants to visit some of the best spots in the world.
Here are two shares that I think will strongly benefit:
Crown Resorts Ltd (ASX: CWN)
Crown Resorts is one of Australia’s largest entertainment businesses.
It owns large casino resorts in Melbourne and Perth. In a few years, Crown Sydney will be added to the list once it’s completed.
Crown operates some of the highest-rated hotels in Australia’s main cities and this will continue attracting the big spenders to pay for nice rooms and perhaps gamble in the casino.
I think Crown’s current problems could prove to be a nice long-term opportunity to buy some beaten-down shares.
Crown is currently trading at 20x FY18’s estimated earnings with a partially franked committed dividend yield of 5.31%.
Auckland International Airport Ltd (ASX: AIA)
This is the company that operates the main airport of New Zealand.
Auckland Airport is receiving growing numbers of international passengers every month. In its August update it disclosed that international passengers had increased by 5.4% compared to last year.
Auckland Airport has an investment stake in Queenstown, MacKay and Cairns airports. So, the business really does have tourism destinations covered.
It’s currently trading at 29x FY18’s estimated earnings with an unfranked dividend yield of 3.34%.
Tourism is clearly a growing trend that many Australian-listed companies can take advantage of. I think Crown and Auckland Airport are two of the best ways to do it and I’m actively looking to add them to my portfolio at a price I like.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Crown Resorts 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.