While the FTSE 100 has been stagnant of late, there are plenty of stocks within the index that are rising. According to my data provider, there are 11 Footsie stocks up 20% or more over the last six months.
Here, I’m going to zoom in on one of these rising stocks. Surprisingly, no-one’s talking about it.
A top Footsie stock
The company I want to highlight today is InterContinental Hotels Group (LSE: IHG). It’s a leading global hotel business that owns a range of brands including InterContinental, Kimpton, Regent, and Holiday Inn.
This stock is certainly performing well.
Over the last six months, it’s risen about 33% (making it the third-best performer in the FTSE 100 over this timeframe). Meanwhile, over five years, it’s up about 70%.
More gains to come?
Looking ahead, I see scope for further share price gains. Despite the cost-of-living crisis, consumers are still spending on experiences. Live concerts are a great example. In the US, Taylor Swift’s tour has been benefitting hotels in a big way. This tour is set to run through to December.
Meanwhile, business travel is coming back after Covid. According to the latest Business Travel Outlook Poll, conducted by the Global Business Travel Association (GBTA), the global business travel industry has put the pandemic behind it and is “riding a wave of momentum at the start of 2024”.
And in the long run, growth should be supported by the retirement of the Baby Boomer generation. Generally speaking, the Boomers love to travel. And many are cashed up right now after the recent increase in interest rates. I expect a lot of this cash to find its way into InterContinental’s coffers as retirees travel the world.
What could go wrong?
Of course, there are risks with this stock. InterContinental operates in a competitive industry, up against some big-name players including Marriott and Hilton. It’s also up against Airbnb, which is disrupting the accommodation market.
A drop in consumer spending is another risk to consider. But I think travel is likely to remain a priority for consumers in the years ahead. Although higher interest rates could affect spending here.
Then there’s the valuation. Currently, InterContinental sports a forward-looking price-to-earnings (P/E) ratio of about 23.
I don’t think that’s a crazy multiple given the company’s brands, level of profitability (high) and long-term tailwinds. But it does add some risk. If growth slows, I’d expect the stock to be volatile.
I’m holding
I’ll point out that I’m invested in InterContinental Hotels. I first bought the stock in September last year. I then bought another parcel of shares in November.
Today, I’m sitting on a gain of about 27%. However, I don’t plan to sell my shares any time soon. I think these shares could keep delivering attractive gains for the next decade and beyond.
