Climbing the Mountain - Vail Resorts - MTN
All value investors should think about Vail Resorts - MTN - $182.
Let’s look at the positives:
Sometimes a simple thesis is best. Last year was the warmest winter in 30 years, and ski resorts suffered. A return to a normal winter will be a big plus.
MTN earned $9.00/share in 2018, what is earnings power today in a normal year? Expectations are fairly low with only 4 buys and 7 sells.
MTN has done a great job of building up to 40+ resorts. Not that long ago this was a tiny company. They only had 5 resorts in 2010.
MTN has reduced risk by selling season passes. This controversial strategy seems to be working. Passes are now 75% of revenue.
Selling ski gear and ski schools did well last year
Ron Baron owns 13% and Select Equity owns 5%, but SE has been trimming their position. I really want to see the 13F for 6/30. MTN bought back $500 million in 2023.
You get a 4.7% yield while you wait. The dividend was increased 9% this year.
The negatives:
If you believe climate change has also eliminated weather variability, I guess you might forecast another warm winter.
Skiing might be more economically cyclical than we think
Maybe MTN has relied to much on price increases
MTN has fewer acquisition targets that can move the needle
Australian operations have had problems
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Let’s consider the other travel related stocks:
Norwegian Cruise - NCLH - $18 - I want to believe, I really do. I just do not think they can go from premium operators to cost cutters with the snap of their fingers. I like the aggressive capacity additions, and the story nobody else can build ships. I watched their investor day presentation and was generally impressed, but I wish they were a little less aggressive. No value owners, just growth guys and that scares me. One bad quarter and the stock will be $8. My bet is it will get worse, before it gets better. NCLH is a very tough call. Maybe I am being too tactical, and not strategic. Not a good sign they reported a good quarter, and the stock was flat.
Choice Hotels - CHH - $127 - These guys are good operators, and the lack of new capacity will eventually benefit CHH, but what is the correct timing. I struggle with this stock. I have some fear they will buy something stupid.
Viad - VVI - $33 - My friend wrote a great piece on his Substack, Investing 501, maybe a little cheaper? This was actually the old Greyhound Bus company, in the 1970’s.
Carnival Cruise - CCL - $17 - value guys not onboard, very funny I made a joke, operations can be sloppy, balance sheet is iffy
Intercontinental Hotels - IHG - $101 - I have lived at least three years of my life at Holiday Inns, so I should know the business, stock never gets cheap enough
Lindblad Expeditions - LIND - $9 - Love the assets, hate the balance sheet, watch
Royal Caribbean - RCL $157 - can’t chase it here
Topgolf Callaway - MODG - $17 - I hate their business strategy with a passion, if I had time more time I would wrtie a short sale report. Sorry, I am grumpy ex-golfer.