Skydive then fried chicken: 2 ASX shares to party through an economic downturn

Consumers don't have much spending power after all these interest rate rises, but these businesses seem to be doing just fine.

| More on:
two smiling people, a man and a woman, raise a hand in a wave as they are tethered to each other while they skydive against a clear sky with a covering of clouds below before their parachute opens.

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

Times are pretty crazy at the moment.

Consumers have hardly any spare cash to spend after ten consecutive months of steep interest rate rises. Yet you would never know it if you visited an airport, where queues are sneaking out of the terminal building.

These contradictions exist because of the stifled freedoms and pent-up savings Australians accumulated during the COVID-19 lockdowns.

Consumers just want to have some fun now.

Here are two ASX shares to buy that could benefit from this theme:

International travellers are back

Wilson Asset Management equities dealer Cooper Rogers likes the look of Experience Co Ltd (ASX: EXP).

"It's benefiting from the recovery of the international traveller," Rogers said on a Wilson video.

"We're seeing increased spend on experiences, rather than goods, particularly from our Chinese and Indian travellers. We expect that to really bode well for Experience Co."

The Experience Co share price has dropped 8.3% over the 12 months, but it has gained a handsome 14.6% since the start of 2023.

According to Cooper, there is one particular business unit that's going gangbusters.

"The skydive division is the one you want to look at. It's got massive operational leverage and with those increased numbers coming back, a lot of that incremental revenue is going to drop through the bottom line," he said.

"EXP is a buy for us."

Even back in 2021, in the midst of the COVID-19 delta lockdown, one expert predicted a boom two years later for this company.

"When international tourists return en masse, hopefully in 2023, it's our belief that this lean, restructured business will be significantly more profitable than ever before," said Forager Funds chief investment officer Steve Johnson.

Hungry for earnings upgrades

Another spending habit that endures even during tough economic conditions is fast food.

In fact, with consumers wanting to spend less eating out, the quick service restaurants become more appealing compared to fancy dining or even mid-price options.

This is why Wilson senior equity analyst Sam Koch considers Restaurant Brands New Zealand Ltd (ASX: RBD) a buy at the moment.

"If you've been to a KFC in NSW recently, you definitely would have been helping our holding."

As well as the KFC brand, the franchisor operates Pizza Hut, Carl's Jr and Taco Bell outlets across New Zealand, Australia and US Pacific territories.

"What we're really attracted to is the fact that whilst input cost inflation has impacted their business…, we see that troughing and actually recovering from here," said Koch.

"And you saw that in the last result."

The stock fell off a cliff late last year, resulting in a current share price that's less than half what it was six months ago.

This gives investors a buying opportunity, according to Koch.

"Earnings upgrades and deploying excess capital are the catalysts we're looking for tos ee a re-rate back to the prior multiple that it traded on."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Experience Co. The Motley Fool Australia has positions in and has recommended Experience Co. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices
Broker Notes

Morgans names 3 ASX stocks to buy following results

Here are three stocks that Morgans is feeling bullish on this week.

Read more »

Woman smiles at camera at she buys greens from the supermarket.
Broker Notes

Are Woolworths shares dirt cheap following the selloff?

Is now the time to pounce? Let's see what one leading broker thinks.

Read more »

A miner in a hardhat makes a sale on his tablet in the field.
Resources Shares

Buy this ASX stock for 'the best lithium mine in the world'

The experts at Blackwattle reckon the battery material will come back into vogue soon, and these are the shares to…

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

a miner wearing a hard hat smiles as he stands in front of heavy earth moving equipment on a barren mine site.
Materials Shares

Should you buy BHP shares following the miner's half-year results?

Should you be snapping up this mining giant's shares? Here's what this broker thinks.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Broker Notes

The best ASX shares to buy with $1,000 right now

Analysts at Morgans see these shares as top options this month.

Read more »

gambling asx share price fall represented by woman in soccer had looking frustrated at tablet screen
Share Fallers

This ASX stock has halved in 6 months. It could be a bargain buy

Remember, what the share price did in the past has nothing to do with what it could do in the…

Read more »

Happy couple with a car dealer.
Broker Notes

Goldman Sachs says buy despite this ASX 200 stock trading at a record high

Let's find out why.

Read more »