In this article, we will explore the 10 best airport stocks to buy.
Passenger Traffic Rebound: Airport Industry Poised for Growth
The airport industry plays a crucial role in facilitating global connectivity, enabling the movement of people and goods across borders. The performance of the airport sector can significantly influence economic growth and development worldwide.
Passenger traffic in the global air travel industry is experiencing a strong rebound as it recovers from the impact of COVID-19. According to Airports Council International (ACI), global passenger volume is projected to reach approximately 8.7 billion in 2023, which is 95% of the pre-pandemic levels seen in 2019. This represents a significant year-over-year growth of 31% from 2022 levels. Looking ahead, 2024 is expected to be a landmark year, with passenger numbers predicted to surpass 2019 levels for the first time since COVID-19, reaching around 9.7 billion passengers, or 106% of the 2019 volume. This represents a 12% year-over-year growth from 2023 levels.
The long-term outlook for the airport and air travel industry is also promising, with total passenger traffic expected to grow at a compound annual growth rate (CAGR) of 4.3% from 2023 to 2042. ACI forecasts indicate that by 2042, global passenger traffic could nearly double the 2024 projection, reaching close to 20 billion passengers.
However, factors such as high global inflation, slowdown of global GDP, extreme weather events, and geopolitical conflicts could introduce substantial risks and uncertainties in future forecasts.
Prioritizing Sustainable Growth and Efficiency
As the airport industry expands, sustainability and efficiency have become key focuses. Airports are implementing energy-efficient lighting and exploring the use of sustainable fuels to lessen their environmental impact.
London Heathrow Airport, one of the busiest airports in the world, is among the airports that are committed to sustainability. Since 2017, the airport has been sourcing 100% renewable electricity to power its terminals. As part of its sustainability strategy, the airport aims to cut carbon emissions on the ground by at least 45% by 2030 compared to 2019 levels. This includes enabling passengers to access the airport sustainably, transitioning to zero-carbon vehicles, and investing in efficient infrastructure.
Airports are committed to optimizing operations and enhancing the passenger experience, while also making significant investments in infrastructure upgrades to support future growth.
On August 30, Bloomberg reported that Schiphol Group NV, the owner of Amsterdam Airport, has announced a significant investment of EUR 6 billion ($6.7 billion) over the next five years to upgrade the airport’s infrastructure. This investment is the largest in the airport’s history and it will focus on renewing essential systems such as baggage handling, climate-control systems, escalators, and taxiways. The airport is also seeing a recovery in passenger traffic, with expectations of welcoming between 65 million and 68 million travelers in 2024.
The airport industry remains resilient and focused on delivering a seamless and sustainable travel experience for passengers. With continued investment and innovation, the sector is well-positioned for long-term growth and success. Now that we have discussed some of the key trends in the global airport industry, let’s take a look at the 10 best airport stocks to buy.
A daytime aerial view of an airport bustling with planes and staff.
Methodology
To compile our list of the best airport stocks to buy, we first consulted stock screeners from Finviz and Yahoo Finance, along with online rankings, to create an initial list of the largest publicly traded airport companies. From this list, we selected the stocks that analysts believe have the most potential for growth. We ranked the best airport stocks to buy based on their average price target upside potential according to analysts, as of September 11, 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Airport Stocks To Buy
10. Grupo Aeroportuario del Pacífico SAB de CV (NYSE:PAC)
Average Price Target Upside Potential According to Analysts: 10.13%
Average Share Price Target Projected by Analysts: $187.00
Grupo Aeroportuario del Pacífico SAB de CV (NYSE:PAC), also known as GAP, is a leading Mexican airport operator that manages 12 airports across the Pacific region of the country. The airports serve cities, metropolitan areas, and tourist destinations in the region. The company also generates revenue from non-aeronautical activities including commercial services, car parking, shops, hotels, restaurants, food and beverage, and VIP lounges.
GAP experienced a number of challenges in the second quarter of 2024, with passenger traffic declining by 3.9% to 15.3 million due to ongoing inspections of A320neo and A321neo engines. The decline in passenger traffic caused revenue to drop by 3.3% compared to the previous year, reaching MXN 213 million in the second quarter of 2024. On the bright side, the company saw a notable increase in commercial revenue, rising nearly 11%, driven by food and beverage sales, car rentals, and VIP lounge usage.
During the second quarter, Grupo Aeroportuario del Pacífico SAB de CV (NYSE:PAC) added three international and two domestic routes, contributing to a total of 13 new routes added in just the first half of the year. The company expects to add around 11 international routes in the second half of 2024. This highlights GAP’s commitment to expanding its network and enhancing customer experience.
On July 9, Grupo Aeroportuario del Pacífico SAB de CV (NYSE:PAC) opened a second VIP lounge at Vallarta Airport to better accommodate the high demand from travelers. Additionally, in June, the company completed the acquisition of a 51.5% stake in Guadalajara World Trade Center (GWTC), a cargo services provider. GWTC generated over MXN 1 billion in revenue in 2023, with an impressive EBITDA margin of around 40% and no debt. This strategic acquisition is expected to boost GAP’s financial performance and position the company well for future success.
Analysts are also bullish on PAC. Analysts currently hold a consensus buy rating on the stock and the 1-year median price target of $187.00 set by analysts indicates a potential upside of 10.13% from current levels.
Despite the company’s recent quarterly performance being less than ideal, its overall financial results have been strong and consistent in recent years. Over the past ten years, Grupo Aeroportuario del Pacífico SAB de CV (NYSE:PAC) has achieved a compound annual growth rate (CAGR) of 16.89% in its revenue, while its net income has grown at a CAGR of 14.21% during the same period.
9. Aena SME SA (OTC:ANNSF)
Average Price Target Upside Potential According to Analysts: 12.72%
Average Share Price Target Projected by Analysts: $228.68
Aena SME SA (OTC:ANNSF) is a Spain-based company that ranks among the largest airport companies in the world. It is primarily engaged in the operation and management of airports and heliports. In Spain, the company manages a network of 46 airports and 2 heliports. Through its subsidiaries and affiliates, the company is present in 33 airports in five countries outside of Spain.
The company’s core business segments include airport management and operations, aeronautical services, commercial services, and infrastructure development. Aena SME SA (OTC:ANNSF) generates revenue from user fees charged to airlines, retail and commercial activities within airport terminals, advertising, parking services, and real estate services.
What sets Aena SME SA (OTC:ANNSF) apart is its extensive international footprint. With operations spanning Brazil, the United Kingdom, Mexico, and Colombia, the company has positioned itself well to capitalize on growth opportunities in diverse markets.
In the first half of 2024, the company delivered impressive financial results. Aena SME SA’s (OTC:ANNSF) passenger traffic grew by 10.5% to 172.7 million. This surge in passenger numbers, coupled with strong performance in both aeronautical and commercial revenue streams, contributed to a 17.7% rise in total consolidated revenue, reaching EUR 2.74 billion.
The company also reported strong cash generation. Net cash from operating activities amounted to EUR 1.40 billion in the first half of 2024 compared to EUR 1.04 billion in the same period last year. Aena SME SA’s (OTC:ANNSF) net profit for the period stood at EUR 808.6 million, a significant increase compared to EUR 607.7 million in the first half of 2023. EBITDA grew by 32.9% to EUR 1.55 billion.
Brazil is a key market for Aena SME SA (OTC:ANNSF). The consolidation of the 11 airports of the Block of Eleven Brazilian Airports (BOAB), managed by Aena Brasil, contributed EUR 91.1 million to revenue and EUR 50.4 million to EBITDA in the first half of 2024.
ANNSF is one of the best airport stocks to buy according to analysts. Analysts have a consensus buy rating on the stock and the 12-month median price target of $228.68 set by analysts indicates a potential upside of 12.72% from current levels.
The company has managed to grow its top line at a compound annual growth rate (CAGR) of 6.35% over the past ten years, while its bottom line has increased at a CAGR of 10.77% during the same period.
