3 tourism shares that could provide market-beating returns

During earnings season in February the tourism sector was the stand out performer in my opinion.

Countless companies delivered better than expected results thanks to the tailwinds of the inbound tourism boom and the growing number of outbound trips made by Australian travellers.

Three shares which I expect to continue benefiting from these tailwinds are listed below. Here’s why I think they are capable of delivering market-beating returns:

Crown Resorts Ltd (ASX: CWN)

I believe that this casino and resorts operator is likely to be a big winner from the tourism boom that Australia continues to experience. As more and more tourists flock to Australia’s capital cities, I expect Crown to see demand for its accommodation rise strongly. This could lead to Crown Resorts enjoying higher occupancy levels and rooms rates, ultimately leading to an increase in its profits and dividend.

Corporate Travel Management Ltd (ASX: CTD)

Arguably the strongest result in the travel and tourism sector during earnings season was the half-year result of Corporate Travel Management. During the first-half of FY 2018 the corporate travel manager reported a sizeable 33% lift in underlying half-year net profit on the prior corresponding period to $36.4 million. Although its shares have risen strongly since that release, I think 30x estimated forward earnings makes them decent value based on the company’s current growth profile.

Webjet Limited (ASX: WEB)

The next best half-year result during earnings season would have to have been Webjet’s. Thanks to the tailwinds it is experiencing from the shift to online travel booking, Webjet once again outperformed the market’s expectations with a 45% increase in net profit after tax before acquisition amortisation from continuing operations. I expect more of the same in the second-half, which could lead to Webjet smashing its full-year EBITDA guidance of $80 million. So, considering its growth potential and the fact that its shares are changing hands at 26x estimated forward earnings, Webjet would have to be my first pick in the industry.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Crown Resorts 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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