Business & Investment

IAG’s stock price is falling again.This is what i do now

Friday FTSE 100, International Consolidated Airlines (LSE: IAG).. By late in the morning, IAG’s share price had fallen 5%, holding back a few days of lows.

The success of the Covid-19 vaccine brought a rare bright patch to the stock market in 2020, giving the company a slight boost in November. But after that short blip, stocks are pretty stagnant. In the last 12 months, just before the pandemic, IAG stocks have lost about 75% of their value.But I have to buy them now Stocks and stocks ISA??

The expected revival of the aviation business was hit hard in 2021. It all depends on the new, more contagious Covid-19 strain and the resulting blockade. And since the UK does not expect to complete the vaccine deployment until around September, there is no return to the wonderful summer sky.

But on the contrary, I British Airways The owner has a strong enough balance sheet to survive the crisis. So, at today’s terribly depressed IAG stock level, is it a bargain? Should I consider putting IAG on the 2021 ISA candidate list?

Great acquisition

IAG’s stock valuation may be quite depressed now. But the same is true for other airlines, and IAG is making the most of it. IAG Iberia Subsidiary is in the process of acquisition Air europa, And the contract has changed.Ann Presentation On Friday, it revealed that the amount paid was cut in half to 500 million euros. In addition, Iberia does not have to pay until the 6th anniversary of the acquisition.

As a result, IAG can buy another airline at half price. And it doesn’t have to pay for it for 6 years. I’ve seen a lot of acquisitions in my time, but it’s hard to remember what’s more appealing. If IAG’s stock price is not rising exactly, such a deal will help ensure that it is maintained.

And this news follows the boost the company received at the end of last year. During December British Airways Affirmed a £ 2 billion five-year term loan export development guarantee facility partially guaranteed by the UK Export Finance Agency. A drawdown is planned for early 2021 to add more liquidity to earnings. Prior to the new facility, IAG had € 8 billion in cash and unused facilities as of November 30. It reinforces my sense that the IAG has comfortable liquidity.

Is IAG’s stock price cheap?

So do I want to buy? In a sense I am. This is because there are increasing signs that the company’s long-term future is healthy, such as the events featured here. At the same time, I don’t think IAG’s stock price reflects its future. Given the current short-term pressure and great uncertainty, it doesn’t surprise me.

But for me, airlines are generally too risky. Maybe nothing is as bad as this pandemic in the next few years. However, airlines appear to be independently susceptible to recession, fuel prices, and many uncontrollable factors. I think IAG stocks will recover. But I’m sticking to a safer sector.

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Alan Oscroft There are no positions in any of the listed shares. The Motley Fool UK does not have a position in any of the listed shares. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.

IAG’s stock price is falling again.This is what i do now IAG’s stock price is falling again.This is what i do now

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