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Why this fund manager prefers Transurban over Sydney Airport, Flight Centre and Qantas

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The clock is ticking on 2020. And for most Australians, the new year can’t come too soon.

Hopes are growing that multiple coronavirus vaccines will largely put this year’s pandemic woes behind us. And along with those hopes, ASX investors are turning their attention to the recovery trade.

4 ASX 200 shares that have soared on the recovery trade

The true scope of COVID-19’s impact on the Aussie and global economies became clear towards the end of February. And investors took note. Commencing on 21 February, most every share on the ASX sold off heavily through to late March.

Shares in the travel sector were some of the most impacted as domestic and international travel slowed to a trickle. They’ve also seen some of the strongest rebounds in recent months as investors eye the light at the end of the viral tunnel.

Here are 4 examples, all part of the S&P/ASX 200 Index (ASX: XJO).

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price crashed 48% by 19 March. Since that low shares have rebounded by 38%.

The Qantas Airways Limited (ASX: QAN) share price plummeted 70% by 19 March. Shares are up 124% since then.

The Flight Centre Travel Group Ltd (ASX: FLT) share price cratered 78% by 19 March. The share price has bounced back 68% since that low.

And finally, toll road developer and operator, Transurban Group‘s (ASX: TCL) share price dropped 39% by 19 March. Shares have gained 38% since then.

Why this fund manager prefers Transurban shares

Atlas Funds Management chief investment officer Hugh Dive believes investors eyeing the recovery trade may be getting ahead of themselves when piling into some of these ASX 200 travel shares.

According to Dive (quoted by the Australian Financial Review):

I’m very surprised at how fast these stocks have all bounced back given they’re a long way out of the woods. Flight Centre, at close to $16, the margin of safety just isn’t there like it was at $7 and you’re staring down the barrel of a long, slow recovery. That price is reflecting a much quicker bounceback than that. We’d like to own Sydney Airport but again, it just doesn’t have that margin of safety.

Something like a Transurban is quite unaffected and traffic in Sydney is pretty much back to where it was. That’s been a better place to put our money than Sydney Airport or Qantas… One of the key things we’re looking for is dividend yield and it’s hard owning a Qantas or a Sydney Airport for a dividend when there’s no revenue.

The Transurban share price is slipping today, down 1%.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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