The Motley Fool

Can Whitbread shares keep climbing?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A graph made of neon tubes in a room
Image source: Getty Images

Whitbread (LSE: WTB) shares have increased by almost 6% since the beginning of 2021. The stock is up 35% during the last 12 months.

Of course past performance isn’t an indication of future returns. But I reckon Whitbread shares can keep climbing. I tipped the stock as being my one of my favourite ‘reopening’ shares in March. I’d still buy, and here’s why.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Trading update

On the whole, Whitbread’s first quarter trading update was positive. 98% of its UK hotels and restaurants are now open. Accommodation as well as food and beverage sales were down during the three month period since government restrictions were in place most of the quarter.

But what’s encouraging is that there are “very strong forward booking trends in tourist locations throughout the summer, and improved forward bookings across the majority of the rest of the estate, with the exception of airport locations and central London”.

This indicates that a recovery is happening. In my opinion, the summer staycation boom is a step in the right direction in terms of returning back to pre-pandemic normality. Large events and business travel is the next step. In fact, Whitbread is continuing to see a “gradual increase in business demand”.

Outlook

The company guidance remains unchanged from what was said at its full-year results in April. Despite the four-week delay in the UK government’s step 4 lockdown release plan, the Board remains confident.

It’s encouraging that the company expects “leisure demand in coastal and other tourist locations to remain very strong throughout the summer”. This emphasises that many are going to holiday in the UK given the travel restrictions. And Whitbread is in great position to capitalise on this trend.

But the firm does highlight that the “full recovery of leisure demand is dependent on the final release of lockdown, and the return of unrestricted events”. I completely agree with this statement and investors will have to wait and see what the UK government announces near the time.

Whitbread also mentions that it doesn’t expect office-based demand to recover until the autumn. If this does happen then this should fall nicely after the summer staycation boom and should driver the shares higher, I think.

My view

Things are starting to recover for Whitbread. The company has a strong brand and value offering, which should help. The UK isn’t fully out of lockdown, but when it is travel within the UK should resume to pre-pandemic levels. This should improve the company’s revenue.

But as I mentioned earlier, this is highly dependent on the UK’s step 4 of lockdown easing. If there’s another Covid-19 delay then this could hit Whitbread shares.

The company also faces stiff competition from other hotel chains as well as the likes of Airbnb. Customers are fickle and like value for money, so there’s no guarantee that Whitbread will emerge as a winner from the staycation boom.

Despite these risks, I think things look promising for the firm. It’s starting to see a good recovery and I reckon this could continue. I’d buy Whitbread shares.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Airbnb, Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.