Growth Focus: Helloworld Travel Ltd (HLO)

by Patrick Taylor

Date of Data Capture: 13/9/2018
Classification: Travel – Consumer Services
Current Price: $5.41
Market Capitalisation: $665 M
Forecast EBITDA Growth: 21.47%
Yield Estimate: 3.81%
Consensus Price Target: $6.01
# Covering Analysts: 4
Discount at Current Price: 11.09%
Price Target Trend: Increasing
Signal Timeframe: Monthly-Weekly-Daily
TrendBias: Up-Flat/Medium-Short

Short-term: Positive-Neutral
Medium-term: Positive

Recommendation: Buy
Focus:(Dividend Income &) Capital Growth
Set up Notes:
·    HLO continues its long-term recovery backed by strong performance and forecasting as pricing pushes against overhead resistance at $5.50.
·    A strong performer since 2016 with analysts forecasting further robust growth to 2021 on expanding sales, margins and earnings.
·    A decent dividend is a nice bonus and should pass 4% by 2020 but we like the potential for further capital growth and the majority positive analyst recommendations should help that.
·    Pricing is pushing against minor resistance at $5.50 through with signalling turning positive here we should see that tested soon with old price targets much higher above and good support layered from $5 to $4 below.

Growth Focus: Helloworld Travel Ltd (HLO)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

After nearly a decade of underperformance and falling prices, long-suffering investors could be about to enjoy a well-earned change of scenery with Helloworld Travel Ltd (HLO) as the travel agent looks to continue its recovery on the back of strong performance, exciting forecasts and a compelling technical outlook that we believe is packed with potential.

Starting out in 2000 this travel distribution company provides international and domestic travel services to clients around the world, with 2000 staff members in Australia, New Zealand, US, India, Europe and Asia Pacific. The company operates retail, wholesale and travel management segments through a wide array of brands including Helloworld Travel, Harvey World Travel, Travel scene, Jetset Travel, My Travel and the newly acquired Magellan Travel. The recent addition of the latter group nicely maps out the combined prospects for further expansion via both organic and acquisitive growth.

Performance has shown steady and sizable gains for the last few years, with earnings up 18% last year and similar growth expected ahead with strong forecasts showing increasing sales, margins and profits out to 2021. This growth profile stacks up nicely with the current 12% discount to sharply rising consensus price targets and carries a strong majority positive outlook. It should be mentioned that HLO can be a low volume stock at times so patience may be needed on entries and exits.

Apart from that little bit of extra baggage, there is also a decent 3.8% dividend yield here, which is expected to increase towards 5% in the same timeframe, but really we are here for growth and there should be plenty of scope with strong sector performance backing them up. A similar growth trend is seen across travel generally with airline passenger numbers showing strong enough growth that we can be reasonably sure that the growth expectations are well grounded.

Pricing history shows HLO travelling through some incredible highs and lows as it navigated the boom and bust and again during the GFC. The strong rally leading up to the peak of 2007 gave way to a crushing bust and seven years of declining valuations before a new long-term uptrend began in 2014. In the time since we have seen the stock moving up through major resistance barriers and pushing higher backed by good performance.

Right now Helloworld Travel offers an attractive ticket, combining excellent fundamental performance and strong forecasting, with an exciting technical outlook and fresh positive signalling across major key timeframes. If strong analyst support and rising targets are correct, this will be no flight of fancy.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?