STANDOUT SHARES:

3 Flight Centre

For the fourth time since 2012, Flight Centre is in our Top 5 portfolio. It has continually shown that its business is profitable, and its financials are healthy as it attained a Skaffold score of A1 or A2 for seven years in a row. With a low level of debt and over $1.4 billion in cash and short-term investments on its balance sheet, Flight Centre is in a good position to invest in its business as well as to pay shareholders a dividend. Moreover, it managed to achieve its key targets of yielding a total transaction value (TTV) of more than $20 billion and growing its online leisure sales beyond $1 billion in the latest fiscal year. This marks the 21st year of TTV growth in the 22 years since listing.

During the past three years, Flight Centre has been investing in its travel experience network, which includes tour operators, destination management companies and hotel management businesses. This aspect of the business has been earmarked as a key growth driver as it opens new sales opportunities through vertical integration and external business-to-business sales of in-destination products. Management also expects net margin to improve after the decline in the 2017 financial year as revenue growth and cost management initiatives gain momentum.

Even though the share price increased 37.8% in the past year, there is still room to grow as it is trading at a 10.2% discount to its estimated intrinsic value.