With the chills of winter finally beginning to chip away at the British weather, I believe that now is a great time to look at five terrific holiday stocks set to raise the temperature.
International Consolidated Airlines Group
British Airways and Iberia operator International Consolidated Airlines (LSE: IAG) is expected to enjoy surging growth in coming years thanks to surging trans-Atlantic business as well as aggressive streamlining of its Spanish unit.
City analysts expect the business to clock up earnings growth of 87% in 2014, in turn creating a reasonable P/E multiple of just 13.3 times prospective earnings. And expectations of an extra 48% advance next year drives this to just 9 times — any reading below 10 is widely considered terrific value for money.
International Consolidated Airlines disappointed investors this month when it announced it would be shelling out its first-ever dividend in 2015. The market had been braced for a final payout for this year. Still, current forecasts point to a 7.7 euro cents per share dividend for 2015, creating a handy-if-unspectacular 1.5% yield.
Thomas Cook Group
Package holiday specialists Thomas Cook (LSE: TCG) has pulled up trees with its multi-year cost-savings package, a situation expected to continue delivering stellar earnings growth. On top of this, the firm is also enjoying surging demand thanks to huge improvements to its online package bookings, a strategy that Thomas Cook is planning to roll out to its other major markets.
As a result the business is anticipated to punch growth of 92% in the year concluding September 2014 with a further 56% advance in the following 12-month period. These forecasts represent stunning value for money, with the package holiday specialist carrying earnings multiples of 13.5 times and 8.6 times for 2014 and 2015 correspondingly.
In addition, Thomas Cook is also widely expected to start paying dividends once again from next year, the firm not having satisfied income chasers since fiscal 2012 in the face of consistent earnings pressure. A projected payment of 2.7p per share produces an appetising 2.1% yield.
Persistent pressure on holidaymakers’ wallets has made easyJet (LSE: EZJ) a favourite flyer for cash-strapped travellers. And with the firm aggressively ramping up its continental services — just this month the firm announced expanded services from its Basel, Milan and Hamburg bases — easyJet is gearing up to enjoy excellent long-term earnings growth.
Consequently, the business is expected to clock up earnings growth of 13% and 10% for the years concluding September 2014 and 2015 respectively, figures which produce attractive earnings multiples of 13.4 times and 12.3 times.
As a result easyJet is expected to keep its explosive dividend policy on track, with last year’s total payment of 33.5p per share predicted to rocket to 45.1p in 2014 and 50.1p in 2015. Such estimates generate tasty yields of 2.9% and 3.3% correspondingly.
Budget carrier Flybe (LSE: FLYB) is also increasing the number of routes it operates to cotton onto surging budget travel demand. This month it announced plans to start flying from the Isle of Man to Stansted, and to increase the number of flights between the London base and Newcastle and Newquay. It is also engaged in huge downsizing to create a more efficient earnings-generating vehicle.
The airline is anticipated to flip from losses of 0.2 per share in the year concluding March 2014 to earnings of 7.1p in 2015, and a blistering 157% rise is expected next year to 18.1p. Consequently Flybe’s P/E multiple of 15.5 times for fiscal 2015 collapses to just 6 times for next year, terrific value which is surely too good to pass up.
As well, next year’s stunning earnings advance is anticipated to pay a dividend next year, with a prospective 1.2p per share payment creating a 0.9% yield.
Not surpsingly, Irish carrier Ryanair (LSE: RYA) is also getting in on the act and this week announced it was opening its 71st base in Bratislava, Slovakia at a cost of €160m.
With surging cheap flight demand expected to continue, Ryanair is anticipated to clock up earnings expansion of 48% and 13% for the years concluding March 2015 and 2016 correspondingly. Accordingly the business carries increasingly-attractive P/E multiples of 15.4 times and 13.6 times for these years.
Ryanair has failed to be a reliable dividend selection, however, and this is reflected in current medium-term forecasts. City consensus suggests a full-year payout of 26.9 euro cents per share in fiscal 2015, creating a solid yield of 3.2%. But this is predicted to fall to 7.3 cents the following year, shifting the yield to a relatively speaking more sobering 0.9%.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.