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Why I think these travel shares could provide market-beating returns

One area of the market which has been on fire in 2018 is the travel industry.

I think this industry was the standout performer during earnings season and wasn’t surprised to see strong gains being made.

The good news is that I don’t believe it is too late to invest in many of these travel shares. Three that I like are listed below:

Experience Co Ltd (ASX: EXP)

One travel share that didn’t turn in a strong full year result last month was Experience Co. The adventure tourism company posted a sharp decline in profit after a once-in-a-generation weather event impacted many of its businesses. I’m optimistic that Experience Co will bounce back with a bang in FY 2019 and resume its growth. I expect this to be underpinned by the tourism boom that Australia is experiencing.

Helloworld Travel Ltd (ASX: HLO)

One of the best performers during earnings season in my opinion was this integrated travel company. Helloworld posted a 3.5% increase in total transaction value to $6.1 billion and an impressive 48.1% increase in profit after tax to $32 million. Pleasingly, management expects this strong form to continue in FY 2019 and has provided earnings growth guidance in the range of 16.5% to 23%. Despite this strong growth and its positive outlook Helloworld’s shares still trade at a little over 19x full year earnings.

Webjet Limited (ASX: WEB)

My favourite option in the travel industry remains this online travel agent. I’ve been very impressed with the way the shift to online booking and the popularity of the company’s brands has allowed Webjet to continue growing its bookings ahead of the industry average. The good news is that management doesn’t expect this trend to end any time soon and is targeting bookings growth rates of more than 3 times the underlying market for the B2C segment and more than 5 times the underlying market for the B2B segment. I expect this to lead to Webjet delivering above-average profit growth for at least the next few years.

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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 EXPERNCECO FPO and Helloworld 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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