Travellers are taking to the skies again in greater numbers, so it's time to have a closer look at locally-listed travel stocks, analysts at Jarden say.
In fact, they're pretty bullish on four stocks in the sector, predicting returns of as much as 67.4%.
So why are they thinking this way? Basically travel companies at the global level are looking pretty healthy, with the latest quarterly figures looking "more optimistic", Jarden says.
In terms of overseas companies, Expedia raised its sales guidance to 3% to 5% based on strong growth in the business to business and room night metrics outside of the US, Jarden says.
And hotel operator Marriott said there was strength in leisure demand and growth in the Asia-Pacific region.
Locally, Jarden has a buy rating on Flight Centre Travel Group Ltd (ASX: FLT) shares, and has a price target of $17.20 on the stock, compared with $12.35 at the moment.
Expectations are low, with Flight Centre (in our view) taking a more cautious approach to guidance. We see Flight Centre as an increasingly capital-light business with margin upside and believe it should trade above its current circa-12 times one-year forward PE (price to earnings ratio). All else equal, we see FY26 earnings per share risk as increasingly skewed to the upside.
Jarden analysts said demand in the airline sector across the Asia-Pacific grew at the second strongest rate globally, behind Latin America, "with expectations that trends improve through FY26, aided by potentially easing geo-political impacts through 2H26".
In Australia, figures released by Westpac Banking Corp (ASX: WBC) showed travel was making a strong contribution to overall card spend, Jarden said, "accelerating through September''.
Driving improving spend is inflationary pressure on domestic and shorter distance trips to Asia.
Which stocks should you buy?
Jarden's top pick in the sector from a share price return point of view is Helloworld Travel Ltd (ASX: HLO), with its price target of $2.80, 60.9% above the current price of $1.74.
Jarden also has an overweight recommendation on Web Travel Group Ltd (ASX: WEB) shares, and a price target of $5.30 compared with $4.07 currently.
It also has an overweight recommendation on Webjet Group Ltd (ASX: WJL), with a price target of $1.20 against 88 cents currently.
In contrast, Jarden analysts see Corporate Travel Management Ltd (ASX: CTD) as fully priced, with a price target of $16 against the current price of $16.07.
The Australian travel sector has lagged global companies, which could turn if we see earnings per share revisions move positive again. We see this as increasingly likely as the global travel backdrop improves.
