The S&P/ASX 200 Index (INDEXASX: XJO) rose 21.8% in 2019. As Foolish investors, we aim to build a portfolio of stocks and ETFs that will beat the market over the long term. The key to this thinking is that the investing time horizon in focus is multiple years in the future – Warren Buffett even believes in the idea of holding your stocks forever!
The ASX travel stocks discussed below lost out to the market in 2019. However, I don't believe that they will lose over the long term. This makes them worth a look for your stock portfolio.
Webjet Limited (ASX: WEB)
Up 18.6%% in 2019, $1.78 billion market capitalisation
Webjet operates the leading business to consumer (B2C) travel brand Webjet, as well as a range of other brands in both the B2C and business to business (B2B) travel booking industry. The company had a rough 2019, with the collapse of partner and debtor Thomas Cook and the growth of Google's presence in online booking. That said, Webjet still has a long runway for growth.
The travel industry is highly fragmented. This means that the industry isn't dominated by 1 or 2 large players that have a lot of pricing power. Webjet has recently seen healthy earnings before interest, tax, depreciation and amortisation margins near 30%. The industry being fragmented also provides great optionality for companies looking to make acquisitions, which is something that Webjet has done well in the past.
The combination of strategic acquisitions and high margins means that the company can target profitable growth for the foreseeable future.
Corporate Travel Management Limited (ASX: CTD)
Down 4.4% in 2019, $2.25 billion market capitalisation
Corporate Travel supplies corporate travel booking services in North America, Europe, Asia and Australia and New Zealand. The stock has been a great performer over the last 9 years with a compound annual growth rate (CAGR) of 32.4%. The company also benefits from the same fragmentation as Webjet.
The stock has been struggling ever since hedge fund VGI Partners raised a short attack in October 2018. Since the short, the company has been focused on executing at the business level. This type of focus is exactly what I want to see from management in this situation and the business results have reflected this.
Foolish bottom line
Both of these travel companies lost to the market in 2019, but have been great long-term performers. As high quality businesses, I believe that 2019 was the outlier in their stock price growth as a result of one-off events.
If Webjet and Corporate travel don't take your fancy, take a look at these other quality businesses.
