3 ASX travel shares to buy while Omicron scares everyone

Eventually Australians will fly again, so here is a trio of stocks to consider buying during the current dip

| More on:
Concept image of a plane flying above a graph and stacks of coins.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Buying up ASX travel shares amid the initial COVID-19 panic in March 2020 served those investors pretty well.

So with the same mindset, one could repeat and rinse during the current Omicron-induced ASX dip.

Shaw and Partners portfolio manager James Gerrish, writing in his newsletter Market Matters (MM), certainly thinks so.

“MM believes it’s time to start considering the out of favour travel and tourism stocks,” he said. 

“Don’t forget how quickly things have changed through 2021!”

Here are 3 ASX shares Gerrish suggested considering:

ASX travel shares are on sale right now

In order of preference, Gerrish likes the look of Corporate Travel Management Ltd (ASX: CTD), Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT)

“But it depends on price and risk appetite, with the last 2 likely to have more upside potential,” he said.

“That is, less capital required for the same result.”

All 3 are undoubtedly selling at a discount at the moment.

Over the past month, Corporate Travel shares have lost around 15%, Webjet has sunk 18%, and Flight Centre dived almost 15%.

Corporate Travel shares on Thursday morning were going for $21.32. Gerrish would pounce if it dipped below the $20 mark.

Webjet has been discounted close to 24% since it hit a 52-week high early last month.

“Omicron [is] clearly causing acceleration towards the downside,” said Gerrish.

“We like Webjet under $5 but I would leave some ammunition to average under $4.50 if the virus outlook deteriorates further.”

Flight Centre shares lost another 1.78% on Thursday morning to trade at $17.11. Its 52-week high of $25.28 in October now seems like a distant memory.

“As we saw from the 85% rally from its August low, the stock’s good value into current weakness when we can finally start packing our bags,” said Gerrish.

“I have planned a quick trip up to Hamilton mid next year but I didn’t consider anything overseas. I imagine many people are the same … looking at how little accommodation is left domestically.”

He added that the Flight Centre share price could drop another 10% to 20%, but it would eventually rise again.

“I do believe it will be well above $20 at some stage in 2022,” Gerrish said.

“The risk-reward is becoming appealing.”

Motley Fool contributor Tony Yoo owns shares of Corporate Travel Management Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Travel Shares

A happy couple who are customers of Flight Centre wait for their flight at an airport lounge
Travel Shares

Are we flying first class with Flight Centre shares?

Analyst sentiment is mixed but tilted toward bullish.

Read more »

a corporate-looking woman looks at her mobile phone as she pulls along her suitcase in another hand while walking through an airport terminal with high glass panelled walls.
Travel Shares

‘Downside is less severe’: Why some brokers are still bullish on the Qantas share price

This airline could see its shares fly higher.

Read more »

a couple at an airline ticket counter have an angry exchange with the employee behind the counter. She is leaning forward in an aggressive manner as they hold a paper ticket in their hands.
Travel Shares

Qantas share price descends as management recruited for ground-handling work

We check the latest on the airline.

Read more »

A woman looks nervous and uncertain holding a hand to her chin while looking at a paper cut out of a plane that she's holding in her other hand. representing the falling Air New Zealand share price today
Travel Shares

Why did the Flight Centre share price underperform the ASX 200 in July?

Let's fly in and examine.

Read more »

A woman ponders a question as she puts money into a piggy bank with a model plane and suitcase nearby.
Travel Shares

Are Qantas shares worth buying ahead of this month’s earnings result?

What's ahead for Qantas?

Read more »

qantas pilot putting hands to her face as if distraught
Travel Shares

Own Flight Centre shares? Here’s why the boss is predicting more pain for the travel sector

What's going on at Flight Centre?

Read more »

A woman wearing a hat, sunglasses and a bathing suit reads the newspaper while sitting on a lounging chair that's placed in a pool in a relaxing setting.
Travel Shares

Here’s what I consider to be the very best ASX 200 share to buy in August

This ASX travel share could be a top pick this month.

Read more »

Two kids wearing pilot's goggles take flight down the runway on their tummies with arms outstretched like wings.
Travel Shares

Why is Rex smashing the Qantas share price on Tuesday?

Shares in Regional Express are outperforming its bigger rival today.

Read more »