As air travel soars on increased Covid-19 vaccine rollout in the U.S., investors may want to consider these five global transportation stocks, as they have good business quality and are trading at attractive GF Valuation ratios: Shenzhen Airport Co. Ltd. (SZSE:000089, Financial), Xiamen International Airport Co. Ltd. (SHSE:600897, Financial), AGP Corp. (TSE:9377, Financial), Grupo Aeroportuario del Sureste SAB de CV (ASR, Financial) and Grupo Aeroportuario del Pacifico SAB de CV (PAC, Financial). These picks were found using the All-in-One Screener, a Premium feature of GuruFocus.
Air travel soars near one-year high, US carriers show optimism
The Transportation Security Administration reported on Monday that 1,344,128 people passed through security checkpoints on Sunday, compared with 1,485,553 travelers on March 14, 2020 and 2,274,658 travelers on March 14, 2019. While Sunday's TSA throughput is down over 45% from the throughput two years ago, the TSA screened over 1 million passengers for the fifth consecutive day on Tuesday.
Atlanta-based Delta Air Lines Inc. (DAL, Financial) and Chicago-based United Airlines Holdings Inc. (UAL, Financial) disclosed in recent filings that bookings have increased during March as the U.S. continues expanding its Covid-19 vaccine administration. The Centers for Disease Control and Prevention said on Friday that the U.S. has administered more than 100 million vaccine doses, resulting in 13.5% of the population being fully vaccinated.
Global airport stocks may benefit from rise in air travel
As air travel starts rebounding domestically, global airport stocks may benefit from the eventual recovery of international travel. GuruFocus' All-in-one Screener identified five transportation stocks with financial strength rank of at least 6, profitability rank of at least 7 and a price-to-GF-Value ratio between 0.6 and 1.2.
GuruFocus' own valuation method branches from Peter Lynch's idea of comparing a stock's current price to an intrinsic value. While the legendary Fidelity Magellan fund manager used 15 times earnings, GuruFocus considers a company's historical price multiples and makes internal adjustments for past performance and future growth estimates.
Stocks with price-to-GF-Value ratio between 0.6 and 1.2 have reasonable valuations according to the method. If a stock is trading more than 1.2 times GF Value, the stock is considered highly overvalued. On the other hand, stocks trading below 0.6 times GF Value can be potential value traps if financial strength and profitability measures suggest low business quality.
Shenzhen Airport
Shares of Shenzhen Airport (SZSE:000089, Financial) traded around 8.96 Chinese yuan ($1.38) on Tuesday, showing that the stock is modestly overvalued based on a price-to-GF-Value ratio of 1.16.
GuruFocus ranks the Guangdong-based airport company's financial strength 9 out of 10 on several positive investing signs, which include a strong Altman Z-score of 5.5 and interest coverage and debt ratios outperforming over 89% of global competitors.
Xiamen International Airport
Shares of Xiamen International Airport (SHSE:600897, Financial) traded around ¥18.62, showing that the stock is modestly overvalued based on Monday's price-to-GF-Value of 1.14.
GuruFocus ranks the Fujian-based airport company's financial strength and profitability 9 out of 10 on several positive investing signs, which include profit margins outperforming over 85% of global competitors and interest coverage ratios outperforming more than 96% of global transportation companies.
AGP Corp.
Shares of AGP Corp. (TSE:9377, Financial) traded around 532 Japanese yen ($4.88), showing that the stock is fairly valued based on Tuesday's price-to-GF-Value ratio of 0.91.
The Japanese industrial company supplies electric power and other services for aircraft. GuruFocus ranks the company's financial strength 8 out of 10 on several positive investing signs, which include interest coverage and debt ratios outperforming over 85% of global competitors despite a low Piotroski F-score of 3.
Grupo Aeroportuario del Sureste
Shares of Grupo Aeroportuario del Sureste (ASR, Financial) traded around $179.31, showing that the stock is modestly overvalued based on Tuesday's price-to-GF-Value ratio of 1.12.
GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank and profit margins and returns outperforming over 85% of global competitors.
Grupo Aeroportuario del Pacifico
Shares of Grupo Aeroportuario del Pacifico (PAC, Financial) traded around $112.69, showing that the stock is modestly overvalued based on Tuesday's price-to-GF-Value ratio of 1.11.
GuruFocus ranks the company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank and profit margins outperforming over 88% of global competitors.
Disclosure: The author has no positions in the stocks mentioned. The mention of stocks in this article does not constitute a recommendation. Investors must do their own research and consider all risks involved in purchasing equity securities especially for global companies.
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