ASUR Beginning Its Ascent

Not much has changed since I last wrote about my favorite play in the travel industry, Mexican airport operator GrupoAeroportuario Del Sureste (NYSE: ASR  ) , sometimes known as Southeast Airport Group, or ASUR.

I still like it better than ticket hawkers like Expedia (Nasdaq: EXPE  ) and (Nasdaq: PCLN  ) , or fliers like ContinentalAirlines (NYSE: CAL  ) , Southwest Airlines (NYSE: LUV  ) , or JetBlue (Nasdaq: JBLU  ) . That's because ASUR has a monopoly on traffic at its airports, with Cancun and Cozumel as the jewels in the group.

Of course, jewels can cut, and that continues to be the trouble at ASUR. The second quarter's financial results, released last week, show a company that's continuing a slow comeback from last fall's devastating hurricanes. With revenues down 2.8% on a 4% dip in overall traffic, margins suffered and profits dwindled -- but not too badly. Operating profit came in 9% lighter than last year, though net income came in 4.5% higher, mainly because of some shifts in income taxes and a small extraordinary item.

To me, the continuing story here centers on trend, price, and value. Traffic and revenues remain down, but less so with each passing month. Share price has taken some significant swings lately, and that's provided us with one of those rare opportunities to load up on a good value while the story stares us straight in the face.

With shares currently lingering just below $34 a pop, they still offer a substantial margin of safety to the $42 I think they're currently worth. I dare say they're even cheaper than those of northerly neighbor and Motley Fool Hidden Gems recommendation GrupoAeroportuario del Pacifico (NYSE: PAC  ) , though I think investors who are confident in the travel business would do well to pick up a few shares of each at today's prices.

You can get the lowdown on my conservative cash-flow valuation for ASUR by checking out our international investing report,Around the World in 80 Minutes, and see what Bill Mann thinks about Pacific Airport Group via a free trial toMotley Fool Hidden Gems.

Fool contributor Seth Jayson is planning his own "research" trip to Cancun soon. At the time of publication, he had shares of ASUR, but no positions in any other company mentioned. View his stock holdings and Fool profile here. Fool rules are here.

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