We recently published a list of 12 Best Airport Stocks to Invest in Now. In this article, we are going to take a look at where Avolta AG (OTC:DUFRY) stands against other best airport stocks to invest in now.
Prior to the pandemic, the travel and tourism industry contributed 10.4% of GDP (US$10.3 trillion) and 10.5% of all jobs (334 million), making it a vital sector of the global economy. The industry’s contribution to global GDP in 2023 was 9.1%, up 23.2% from 2022 and just 4.1% below 2019 levels, according to WTTC‘s most recent research. Domestic visitor expenditure increased by 18.1%, surpassing 2019 levels, while employment increased by 27 million jobs, a 9.1% year-over-year gain. Spending by foreign visitors increased by 33.1%, but it was still 14.4% less than before the outbreak.
Julia Simpson, WTTC President & CEO, on April 2024, stated:
“The future is very bright. We can predict a record-breaking 2024. The sector’s global economic contribution is set to reach an all-time high of $11.1 trillion, which will generate one in every ten dollars worldwide. The sector is also expected to support nearly 348 million jobs, an increase of 13.6 million jobs on its 2019 record. We trust that our data will support policymakers, industry professionals and individuals engaged in the evolution of travel.”
According to Fortune Business Insights, in 2024, the size of the global market for airport services was valued at $196.96 billion. The market is expected to increase at a compound annual growth rate of 14.4% from $222.26 billion in 2025 to $570.12 billion by 2032. In 2024, North America held a 28.98% market share, dominating the airport services industry. Furthermore, it is projected that the airport services market in the United States will expand considerably, reaching an estimated value of $130.37 billion by 2032. This growth will be fueled by a rise in air and passenger traffic as well as cargo transportation.
According to S&P’s report, the worldwide travel retail sector is expected to expand by 7%-10% between 2024 and 2025, greatly above the 3.3% and 3.2% growth in the global GDP in 2024 and 2025, respectively. Sales won’t approach 2019 levels until 2025, but air traffic will surpass pre-pandemic levels in 2024. Growth will be driven by Asia-Pacific, helped by better infrastructure and a growing middle class. Duty-free shopping, however, might be slowed by declining consumer confidence and fewer business tourists.
As per the aforementioned report, over the next two to four years, it is anticipated that global air traffic will increase more quickly than GDP due to growing middle classes in Asia-Pacific and, to a lesser extent, Latin America, as well as better infrastructure and connectivity. By incorporating technology, personalization, and hybrid stores that blend duty-free shopping with dining options and entertainment, travel businesses are adjusting. Customer experiences are also being improved by a move toward luxury items, fashion, electronics, and regional merchandise. More passenger time will be available for shopping because of increased digitization, remote check-in, and bag-drop services. However, sector profits are under pressure from growing airport concession fees, which have leveled off at higher levels since the pandemic. Chinese operators have secured reduced concession rates, giving them a competitive edge, even though the majority of travel shops would see a rise in expenses.
Looking ahead, according to Deloitte’s report, in 2025, travel demand is projected to be high due to post-pandemic lifestyle changes, greater freedom in working remotely, and a promising economic outlook. TSA throughput climbed by 7% year over year between December 20 and January 5 as a result of US tourists planning longer and more costly travels during the recent winter holiday season. A post-pandemic reprioritization, with 40% of travelers raising their holiday budgets because travel has become more important, and the growing trend of “laptop lugging,” where half of passengers want to work remotely while traveling, are important factors. Travel expenditure was also supported by the fact that the percentage of Americans who reported an improved financial situation jumped from 31% to 37%. Travel agencies need to adjust to new AI applications, changing global travel patterns, increased service offerings, and possible regulatory changes under a new administration to meet this demand.
An aerial photo of a busy airport, showing the scale and scope of the companies freight delivery services.
Methodology
We sifted through holdings of airport services ETFs and online rankings to form an initial list of 20 airport stocks. From the resultant dataset, we chose 12 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s market capitalization as of February 12 for stocks that are trading under OTC.
Why are we interested in 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).
Avolta AG (OTC:DUFRY)
Market cap as of February 12: $6.61 billion
In November 2023, the business, which had previously been known as Dufry AG, changed its name to Avolta AG (OTC:DUFRY). Founded in 1865, Avolta AG has its main office in Basel, Switzerland. Avolta leads the travel retail industry and operates the biggest duty-free store globally. More than 80% of the company’s (Avolta and purchased Autogrill) total revenue comes from airports. Europe and the Americas are the company’s primary markets, with Asia accounting for 4% of total sales in 2023.
Avolta AG (OTC:DUFRY) announced impressive Q3 and year-to-date results, continuing its seven-quarter growth trend. The company’s first nine months of 2024 observed a 6.8% like-for-like growth in revenue, reaching $10.48 billion. The EBITDA margin increased by 40 basis points to 9.9% due to cost management, operational efficiency, and solid demand. Equity-free cash flow exceeded forecasts, rising 46% YoY to $445 million. The company continues to be highly diversified across business lines and regions, with notable expansion in North America, Asia Pacific, and EMEA. Avolta’s net leverage fell to 2.16x, the lowest level in 14 years, with 1.5x to 2x being its medium-term goal.
As part of its Destination 2027 plan, Avolta AG (OTC:DUFRY) is concentrating on digital transformation, hybrid retail ideas, and consumer-centric activities. It has opened 34 hybrid stores thus far, with 40 more planned, and introduced a new loyalty program called Club Avolta.
Overall, DUFRY ranks 12th on our list of Best Airport Stocks to Invest in Now. While we acknowledge the potential for DUFRY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DUFRY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
