It remains a long, slow clawback for Mexican airport operator Grupo Aeroporuario del Sureste (NYSE:ASR), known as ASUR.
The company, which runs the airports at Cancun, Cozumel, and other locations, was hit hard by last year's hurricanes and the slow pace of reconstruction, but traffic finally seems to be picking up. Today, the firm announced 20% year-over-year growth in passenger traffic for the month of October -- but that's not quite as exciting as it sounds.
Last year's numbers were hampered by the hurricane cleanup, so it's instructive to compare them to the more normal month of October 2004. On that basis, October 2006 traffic was down 3.8% overall, with traffic at the all-important Cancun hub down 7.2%. That might not be too bad, considering that things still aren't back to normal, but it is a step back from September's tally. Comparing overall and Cancun-only traffic for September 2006 and September 2004, we find that this year's numbers were off less than 1% overall and only 4% at Cancun.
So, all in all, I call this one a bit of a step back. Not a big tragedy, but nothing to write home about, either.
But that doesn't sour my outlook on the shares, which moved ahead a couple of percent today.
My reasoning is pretty basic. I believe travel is a growing industry, especially given the number of baby boomers heading into retirement with fat bank accounts. So, this is definitely a business I want to be in, but how?
There are plenty of ways to invest. You could go for a plane maker, like Boeing (NYSE:BA) which seems to be raking in all the chips due to terrible mistakes at rival Airbus. You could go with hotels like Hilton Hotels (NYSE:HLT) or Marriot International (NYSE:MAR). You could try the travel agencies like Expedia.com (NASDAQ:EXPE). Or you could take Richard Branson's advice on how to become a millionaire -- start out as a billionaire, then buy an airline. Perhaps JetBlue (NYSE:JBLU) or Southwest (NYSE:LUV)?
No thanks.
The problem with all those ideas is the cutthroat competition. The near-complete lack of competition is the beauty of investing in a monopoly airport operator like ASUR. Even though this month's numbers aren't so hot, you at least know that fliers aren't being picked off by the airport down the street.
By my math, the shares look fairly valued these days, but should traffic pick up beyond expectations, they may quickly look cheap in retrospect.
ASUR has turned in a better than 21% gain (versus 7% for the S&P 500) since Seth recommended it to Fool readers in our March International Report. And this is exactly the kind of opportunity that Seth hopes to help Bill Mann and the rest of theGlobal Gainsteam find every month. To see what kind of cheap international opportunities the team has uncovered lately, a free trial is available. JetBlue is a Stock Advisor pick.
At the time of publication, Seth Jayson had shares of ASUR but no positions in any other company mentioned. View his stock holdings and Fool profile here. See what he's Digging these days. Fool rules are here.
