Stock market

After climbing 20% ​​in March, what’s next for IAG’s share price?

Image source: Getty Images

gave International Consolidated Airlines (LSE: IAG) share price has had a cracking month, rising 20% ​​in March.

After a terrible time for the business, we’re still seeing a 66% drop in five years.

But what has been cheering the stock market over the past few months? I see a few things.

passion

I really think the sentiment towards the aviation business is finally starting to get better. Well, we saw a brief spell of optimism as early as 2023, but it didn’t materialize.

But this time, I see a few fundamental differences. We are emerging from a period of high inflation, with costs rising rapidly. A year on, we’re really just starting to see the pain of inflation.

As we started to emerge from the Covid pandemic, people were more concerned about paying their mortgage than spending cash on flying in search of the sun.

At this point in 2024, though, the forecast makes the stock look cheap.

Predictions

What do they say? Here’s a look at how the city’s residents think things might play out compared to the 2023 outcome:

The year Earnings
per share
P/E ratio Dividend Dividend
production
2023 45.3 p 3.9 0 p 0%
2024 (f) 43.1 p 4.1 4.5 p 2.5%
2025 (f) 47.5 p 3.7 7.6 p 4.3%
2026 (f) 51.0p 3.5 9.3 p 5.3%
(f = Forecast. Sources: Yahoo!, Market Screener, Company Accounts)

The price-to-earnings (P/E) ratios and dividend yields in the table are based on the share price at market close on March 28 – but it’s still the same as I write, at 171p.

Does this make IAG a good stock to include in my 2024 stocks and shares ISA?

I’ve stayed far away from airline stocks for years, because I just saw too much risk. This is even when they are cheap. And even when hindsight shows we have a good time to buy.

I prefer to follow Warren Buffett’s idea that “Buying a great company at a fair price is much better than buying a fair company at a great price.

wonderful.

But wait, Buffett has bought airlines. In the past, it has invested billions of dollars. Delta, united, American AirlinesAnd Southwest.

But he has since dumped them and gone out of business. And he famously said: “If a capitalist had been in Kitty Hawk in the early 1900s, he should have shot Orwell Wright. He would have saved money for his children.

If anyone runs the Buffett experiment. Berkshire Hathaway And with its astonishing success causing so much trouble for the industry, what are the chances of someone like me ever recovering?

Attractive, but…

Hmmm, those low forecast P/E values, and the potential for a 5% dividend yield in a couple of years…

But, back to Buffett:I have 800. [free call] The number I call now if I want to buy airline stock. I call at two in the morning and I say: ‘My name is Warren and I’m an aeroholic.’ And then they talk to me.

I’ll put my money elsewhere. Although I expect the IAG share price to do well in 2024.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button