Travel shares on the ASX have been smashed as investors fear what the consequences will be for their earnings and balance sheets.
Shares like Corporate Travel Management Ltd (ASX: CTD) have seen their share prices drop enormously in just a few weeks.
I personally believe that shares like Webjet Limited (ASX: WEB) and Qantas Airways Limited (ASX: QAN) will end up being some of the best performers over the next three years, but you'd have to be brave to buy today. Don't forget that ultimately lower prices are better for investors who are looking to buy.
I think there are two travel shares in-particular that look like they could be good buys today:
Sydney Airport Holdings Pty Ltd (ASX: SYD)
The Sydney Airport share price is down 16.7% today and it's down 42% since 21 February 2020.
Passenger numbers are down significantly as the coronavirus outbreak causes many passengers to reconsider their travel arrangements.
However, this outbreak will be a one-off, whether it takes a month or a year to be resolved. At some point Sydney Airport will see a return of domestic and international passengers when restrictions are lifted.
We could see a large comeback of Chinese travellers in-particular after months of restricted travel.
Not only should travel return to normal, but Australian and US interest rates are now extremely low, which will make yield plays like Sydney Airport seem very attractive.
It currently has a trailing yield of 8%. There's a good chance the dividend will be reduced in the upcoming 12 months, but after that it could have an attractively stable dividend again.
Auckland International Airport Limited (ASX: AIA)
New Zealand is taking strong measures to try to limit the spread of the coronavirus. In the short-term it will be painful for businesses and airports, but in the medium-term it could see confidence about New Zealand return quicker than other countries, which could see Chinese tourists return sooner than later.
The only real way for people to fly into New Zealand is through Auckland, which makes Auckland Airport attractive as an investment seeing as New Zealand is a pretty remote island country.
It is also seeing a large reduction in passengers, but I think they will mostly return over the next two years.
The Auckland Airport share price is down 19% today and it has fallen 37% since 21 February 2020.
Foolish takeaway
Both airports are looking very cheap when you factor in how low interest rates are. Their earnings will obviously be hit this year and perhaps FY21. But looking at FY22 onwards, these share prices could be far too cheap to pass up if you're interested in infrastructure shares. Of the two I'd probably go for Auckland Airport.
