Why I think the Webjet share price is a buy

The Webjet Limited (ASX: WEB) share price has taken off at the start of 2019, up almost 50%. Here's why I still think it's a buy.

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The Webjet Limited (ASX: WEB) share price has taken off at the start of 2019, with the company announcing pleasing half-yearly results on February 21.

Webjet is Australia and New Zealand's leading online travel agency.  It enables customers to compare, combine and book the best domestic and international travel flight deals, hotel accommodation, holiday package deals, travel insurance and car hire worldwide.

If you're considering investing in this company, see below why I still think Webjet shares could be a buy.

Before assessing the Webjet investment case, it is important to take a broader look at consumer spending in this space.  More sales are going to the internet every year. Technologically adept millennials are getting older and are choosing less and less to enter bricks and mortar travel agents as they feel more comfortable buying online.

WebBeds growth story

The Webjet share price has increased as much as 50% since the start of January, after posting some excellent growth numbers that have caught the eye of investors.  The company delivered a record first-half performance with a 42% increase in EBITDA to $58.0 million. Revenue grew 33% to $175.3 million and net profit after tax was up 61% to $38.3 million.

The emergence of the WebBeds story has been a key highlight from this reporting season, as this business unit became the largest at Webjet (if measured by EBITDA).  Its EBITDA more than doubled year-on-year with strong growth delivered through the European and Middle Eastern markets.  It also derives solid EBITDA from the US arm of the business.

The result from WebBeds and the overall company points to earning streams coming from all different regions.  This reduces the risk faced by any single economy, as one region may be thriving while others struggle.

The travel agent market is highly fragmented and this represents both an opportunity and risk for Webjet.  The opportunity is there due to the company only having penetrated a very small amount of the overall market, but the risk is that it has an easy product to replicate and other might try and come in.

Foolish Takeaway

There is no doubt that the world is transitioning away from bricks and mortar travel agencies and converting to online solutions.  Webjet is a company with a strong brand presence that is continuing to grow on the back of this trend.

Whilst I think the Webjet share price might be a bit expensive following these results, I think it could be a fantastic buy and hold opportunity.

Motley Fool contributor Michael Guinery owns shares in Webjet Ltd. 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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