ON THE BEACH (OTB) 446.5p

Loss to date: 11.6% Orig­i­nal en­try point: Buy at 505p, 30 Au­gust 2018

Shares - - GREAT IDEAS UPDATES -

ON­LINE BEACH hol­i­days re­tailer On The Beach (OTB) has been hit by trou­bles in the sec­tor as the shares have re­versed more than 11% to 446.5p since we flagged it as a com­pelling op­por­tu­nity.

Shares in tour op­er­a­tors Thomas Cook (TCG) and TUI (TUI) are also in a down­ward spi­ral with the for­mer serv­ing up a big profit warn­ing.

It ap­pears the sec­tor can­not shake off con­cerns over trad­ing af­ter the blis­ter­ing sum­mer weather de­terred peo­ple from book­ing an over­seas hol­i­day.

Peel Hunt an­a­lyst Ivor Jones ar­gues the ab­sence of an Oc­to­ber trad­ing state­ment de­spite the un­usual sum­mer im­plies trad­ing is on track.

‘If there is to be dis­rup­tion to the travel mar­ket [from Brexit] we do not ex­pect On The Beach to be im­mune, but do ex­pect it to fare bet­ter than com­peti­tors with high fixed costs and emerge with an en­hanced mar­ket share,’ com­ments Jones.

On The Beach’s re­cent ac­qui­si­tion of Clas­sic Col­lec­tion, a busi­ness-to-busi­ness distri­bu­tion net­work, which sells premium hol­i­days, should of­fer a new growth op­por­tu­nity.

SHARES SAYS:

We think the fall in the share price is due to neg­a­tive sen­ti­ment in the sec­tor rather than a poor op­er­a­tional per­for­mance.

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