This fund manager thinks Event Hospitality and Entertainment Ltd is a buy

I’m always interested in learning what fund managers think are worth buying, particularly ones that have a history of outperforming the market or their peers.

Carlton Investments Limited (ASX: CIN) has returned an average of 13.4% per annum over the last five years. This performance is better than most of its peers which focus on large caps and it could be on track for further outperformance because of one key investment.

It’s rare for a fund manager to have one share that makes up more than 10% of their portfolio. If they do hold more than 10% it’s a sign of very high conviction in that business.

In its update for 30 September 2017 Carlton revealed that 41% of its portfolio is invested in Event Hospitality and Entertainment Ltd (ASX: EVT).

Event operates cinemas, hotels and resorts in Australia, Fiji, New Zealand and Germany.

The share price has almost doubled over the last five years, growing from $6.77 to today’s $13.02. This growth has been somewhat validated by the earnings per share growing from 50.1 cents in FY12 to 68.7 cents In FY17.

The main reason that Event could be a market-beating idea is that leisure spending is expected to increase over the coming years with both more people reaching retirement age and increasing amounts of tourists visiting Australia who will probably use Event’s hotels and resorts.

Foolish takeaway

Event is trading at 17x FY18’s estimated earnings with a grossed-up dividend yield of 5.6%. If I wanted to get exposure to Event then I’d consider investing in Carlton because it has such a large exposure, but also has a good grossed-up dividend yield of 5%.

Other shares that are strongly benefiting from leisure spending growth are two of these stocks.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Event Hospitality & Entertainment. 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.