Accumulate Thomas Cook stock for multibagger gains

It’s always difficult to predict when certain under-appreciated stocks will rebound. But we can understand which sectors are down due to the Covid-19 pandemic. Sectors badly hit in the last one year are hospitality, tourism, travel, airlines, etc. Stocks in these sectors may be down but not out and these stocks may be well-positioned to rise. This is the basic investment principle that underpins value investing. Target these under-appreciated stocks and invest in them. Then, wait for the market to come to its senses and appreciate your wisdom. But there is an obvious inherent risk in this strategy as the stock market may never see the value and prices may never rise. In fact, prices can decline. But that is investing! There are many stocks in the universe that are fundamentally very strong based on their financial positions. Though they are facing tough situations at present, these under-appreciated stocks also have what it takes to rebound. The world is facing an unprecedented global health, social and economic emergency as a result of the Covid-19 pandemic. Travel and tourism is among the most affected sectors with a massive fall of international demand amid global travel restrictions including many borders fully closed, to contain the virus. According to data from the World Travel Organisation or WTO, international tourism in India and around the world has seen a massive decline due to slow virus containment, low traveller confidence and important travel restrictions still in place due to the Covid-19 pandemic. Based on current trends, they expect international arrivals to decline massively for the whole of 2021. This would mean that international tourism could have returned to levels of 30 years ago.
The estimated decline in internationals tourism is equivalent to a loss of about US$ 1.1 trillion in international tourism receipts for the whole world. This plunge in international tourism could result in an estimated economic loss of over US$ 2 trillion in global GDP, which is more than 2% of the world’s GDP in 2019. Many analysts and equity research staff feel that travel companies like Thomas Cook India Ltd are good buys at the moment where the stock price has declined from Rs 200 levels in 2019-20 to Rs 60 levels at present. Looking ahead to 2022, positive announcement pertaining to reduced levels of virus infection around the world and faster vaccination progress are expected to gradually increase consumer confidence and contribute to easier travel restrictions.
The Thomas Cook stock currently quoting at Rs 60 on the bourses is a very good buy for long-term portfolio gains.
The stock has been averaging around Rs 200 levels in the past and as and when the world becomes normal, these companies will see a smart revival. Long term investors can accumulate the Thomas Cook stock for multibagger gains.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.