Should you buy Sydney Airport Holdings Pty Ltd shares after its update?

Is the Sydney Airport Holdings Pty Ltd (ASX:SYD) share price in the buy zone after reporting strong passenger growth in February?

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The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be on watch today after Australia's leading airport operator announced its traffic figures for the month of February.

According to the release, Sydney Airport experienced a 5.1% lift in total monthly passenger numbers in February compared to the prior corresponding period. A total of 3,452,000 passengers passed through Sydney Airport's gates during the month.

The biggest driver of this growth came from international passengers. During the month visitors from China, USA, Canada, and India, rose 28.2%, 14.1%, 10%, and 6.3%, respectively, on the prior corresponding period.

This was due to strong growth in capacity and a small rise in load factors during the Lunar New Year holiday and led to approximately 1.3 million international passengers travelling through Sydney Airport in February. An increase of 7.4% from a year earlier.

Domestic passenger growth was no slouch, either. Over 2.1 million domestic passengers used Sydney Airport in February, a rise of 3.8% from February 2017.

This now means that year-to-date Sydney Airport's passenger numbers have risen 3.1% on the prior corresponding period to 7,330,000.

Should you invest?

I think that Sydney Airport is up there with Crown Resorts Ltd (ASX: CWN) and Webjet Limited (ASX: WEB) as one of the best ways to gain exposure to the tourism boom that Australia is experiencing.

The only one drawback to an investment is of course rising rates in the United States. Sydney Airport has been used as a bond proxy whilst rates have been low. But with rates now rising quickly, there's a danger that investors could soon dump its shares in favour of bonds.

I'm optimistic that its solid long-term growth prospects and generous dividend will mean it doesn't suffer this fate, however it is something to bear in mind when considering an investment in the company's shares.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited and Sydney Airport Holdings Limited. The Motley Fool Australia has recommended Webjet Ltd. 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 Scott Phillips.

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