We recently compiled a list of the 10 Best Airport Stocks To Buy. In this article, we are going to take a look at where Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) stands against the other airport stocks.
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.
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).
A daytime aerial view of an airport bustling with planes and staff.
Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB)
Average Price Target Upside Potential According to Analysts: 17.59%
Average Share Price Target Projected by Analysts: $78.49
Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB), better known as OMA, is a Mexican airport operator that ranks among the best airport stocks to buy. The company holds the concessions to operate, manage, and develop 13 international airports in the central and northern regions of Mexico. OMA’s unique business model focuses on developing and operating airports that serve a diverse mix of metropolitan areas, tourist destinations, regional centers, and border cities. This balanced portfolio allows the company to capitalize on growth opportunities in different sectors. Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) airports serve major cities like Monterrey, as well as popular tourist destinations such as Acapulco, Mazatlán, and Zihuatanejo. Additionally, the company operates the NH Collection Hotel located in Terminal 2 of Mexico City airport and the Hilton Garden Inn at Monterrey airport.
OMA provides a range of airport and commercial services to passengers and clients within its facilities. The majority of the company’s revenue comes from aeronautical services, which include passenger charges, landing fees, parking fees, and airport security charges. In addition to these regulated services, Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) also generates significant income from commercial activities, such as restaurants, retail shops, duty-free stores, car rentals, and parking. The company is focused on creating new revenue streams through businesses that complement air travel, including hotels, real estate, and logistics services.
Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) is showing promising signs of potential growth, making it an attractive stock to consider. In Q2 2024, the company reported a total passenger traffic of 6.5 million, slightly down by 2.4% from the second quarter of last year. This was primarily due to external factors like the Pratt & Whitney engine recall. However, international passenger traffic surged by 12% compared to the second quarter of 2023, largely driven by strong performance at Monterrey Airport, which saw significant increases in routes to cities like Atlanta, Las Vegas, Toronto, and Orlando. In the first half of 2024, the company launched six new international routes, further strengthening OMA’s connectivity and positioning the company well for future growth.
In the second quarter of 2024, Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) reported an 11.9% increase in commercial revenues year-over-year, with notable growth in VIP lounges, parking, and restaurants. The company successfully completed the expansion of the Terminal A East public area, adding over 6,000 square meters of space, which includes new documentation counters and commercial outlets, increasing Monterrey International Airport’s capacity to 13.9 million passengers annually. OMA is also actively investing in expanding and remodeling terminal buildings in Ciudad Juárez, Torreon, Culiacan, Durango, and Mazatlan.
During the Q2 2024 earnings call, CEO Ricardo Dueñas Espriu announced that Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) invested MXN 816 million in its Master Development Program, along with major maintenance and strategic projects. These investments and developments reflect the company’s commitment to enhancing its infrastructure and operational capabilities to support future growth and improve passenger experience.
Over the past ten years, Grupo Aeroportuario del Centro Norte SAB de CV (NASDAQ:OMAB) has grown its revenue at a compound annual growth rate (CAGR) of 15.44%, while its net income has increased at a CAGR of 15.11% during the same period. Over the past 10 years, the company has also grown its levered free cash flow by more than 43%.
As of September 11, OMAB’s stock is trading at $66.75, and analysts have a consensus buy recommendation for the stock. The median 1-year stock price target set by analysts is $78.49, indicating a potential upside of 17.59% from its current price.
Overall OMAB ranks 7th among the best airport stocks to buy. While we acknowledge the potential of OMAB as an investment, our conviction lies in the belief that 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 OMAB 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.