The summer holidays are finally here! Children have finished school and parents are juggling the demands of work with looking after their offspring.
Many families will be looking forward to a holiday, with UK and international breaks scheduled before the return to normality in September.
But which companies are most likely to benefit from the summer getaway? Here we outline some potential winners and the investment funds that invest in them.
There’s no shortage of travel-related companies listed on global stock exchanges, including airlines, cruise companies and hotel groups. One of the biggest names is Booking Holidays Inc, an American technology company that’s become a leading name in online travel.
The company, which has customers and partners in more than 220 countries and territories, operates through familiar brands such as Booking.com and OpenTable. Perhaps unsurprisingly, this makes it the largest travel company by market capitalisation, with a valuation of more than $106bn*.
Booking Holidays is one of the 10 largest stock positions in Brown Advisory US Flexible Equity**. This fund, which is run by Maneesh Bajaj, has an unconstrained strategy that enables the manager to select companies from across the market cap spectrum. It’s not easy to find funds that have managed to achieve long-term outperformance of the S&P 500, but it’s something this strategy has been doing for more than 25 years.
Maneesh recently told us more about why he likes Booking.com in this video interview.
Hitting the shops – virtually or in person – is one of the pre-holiday essentials, whether you’re buying new clothes or stocking up on toiletries.
Let’s take the online option first. Alphabet, the parent company of search engine Google, is the most obvious first potential beneficiary. In Alphabet’s first quarter 2023 results, it revealed revenues had increased 3% year-on-year to $69.8bn, which it attributed to resilience in its ‘Search’ division and momentum in ‘Cloud’.
Then there’s Amazon.com. This is the first port of call for many people looking to make a purchase and its recent results suggest it’s on the right track. Net sales increased 9% to $127.4bn in the first quarter, compared with $116.4bn in the corresponding period in 2022, according to the company’s results statement.
Both of these companies are currently holdings in the T.Rowe Price US Large Cap Growth Equity fund, which is managed by Taymour Tamaddon. He invests in large US firms that demonstrate innovation and change – and will back with strong conviction those that make the grade.
Regardless of how well you’ve planned, there’s always the likelihood of forgetting something and having to make a detour to the shops after getting through airport security. One of the big winners in this area is WH Smith. While a familiar name through its high street outlets, the company is now one of the world’s leading global travel retailers.
The company boasts an increasing presence in international airports, with its outlets selling a variety of tech accessories, as well as books and magazines. In a trading update for the 13 weeks to 27th May 2023, the company declared it was in a good position as it approached the peak summer trading period. “Trading is strong across all three Travel divisions, and we are very well positioned to capitalise on the substantial growth drivers across our markets,” it stated.
WH Smith is one of the 10 largest holdings in the AXA Framlington UK Mid Cap fund**, which is run by Chris St John. We like the fund’s robust investment process, and the fact Chris uses thematic long-term ideas to help construct a portfolio of dynamic growth companies.
Don’t forget the other big winners of shopping trends: the payment providers. For example, Visa is one of the holdings in the Rathbone Global Opportunities fund**. This is a global growth fund, managed by James Thomson, that looks to buy innovative companies that often fly under the radar of the main market.
MasterCard, meanwhile, is currently the second largest holding in the CT Global Focus fund**, which has been run for the past five years by David Dudding. This is a concentrated, high conviction portfolio of best ideas. It invests in high quality, high return on capital businesses that can compound over the long term.
Elsewhere, Accesso Technology Group provides ticketing, point of sale, virtual queuing, and guest experience management solutions to customers across the world. The TB Amati UK Listed Smaller Companies fund has bought into this story and has the company in its top ten**. This is an unconstrained portfolio searching out structural UK growth businesses that can grow faster than the economy.
Wherever you choose to spend your holidays, the chances are you’ll need further transport after reaching your destination. If it’s in one of the 10,000 plus cities embraced by Uber, then you may decide to use this app to find a driver to ferry you between the airport and hotel.
Uber grew revenue 29% year-on-year to $8.8bn, according to its financial highlights for the first quarter of 2023.
In a statement, Nelson Chai, the company’s chief financial officer, said: “We delivered record profitability and free cash flow in Q1, and we are poised to expand profitability again in quarter two.”
The company, which went public and started trading on the New York Stock Exchange in May 2019, is a holding in the CT Global Extended Alpha fund. We see this portfolio as a hidden gem in the global sector. Despite having consistently delivered excellent performance for years, it remains relatively small. Its manager, Neil Robson, takes full advantage of the fund’s 130/30 structure, which enables him to make money on stocks that he expects to do well, along with those predicted to do badly by a technique known as ‘shorting’.
*Source: companiesmarketcap.com, 31 July 2023
**Source: fund factsheet, 30 June 2023
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice.