Business & Investment

If this happens, I think IAG’s stock price could rise.

I have mixed opinions about IAG (LSE: IAG) Stock price. I think it looks cheap compared to the transaction history. However, this ignores the fact that the business has changed significantly over the last two years.

The pandemic squeezed profits and profits, and the company took on huge debt to survive the crisis.

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But once we start moving out of the pandemic, I think the company has potential. However, speculative investment will continue until the recovery progresses concretely.

Nevertheless, here is one important factor that I believe I justify. Significant revaluation of stocks..

Possibility of IAG stock price

Unlike most UK-listed peers, IAG British Airways Brands rely heavily on long-distance travel routes. By comparison, With When EasyJet A short-distance, low-cost carrier.

These are two completely different business models. Therefore, comparing them can be misleading. IAG is also a larger and more diversified business. Its stable airline brand gives the Group a foothold in many markets around the world. This is a true competitive advantage.

For group brands, Iberia When Aer Lingus along with BA, Provides an internationally diversified portfolio. Unfortunately, this has also been a thorny problem for the company for the past two years.

International travel bans have eradicated long-distance travel. Europe’s short-haul markets have recovered, but long-haul markets continue to suffer as countries continue to experiment with travel bans.

Dollar box

The jewel of the company’s crown is London Heathrow Hub and New York John F Kennedy International Airport.. This is the most profitable airline route on the planet.

For the past two years, travel bans and restrictions have restricted activity on this route. However, after the US travel ban was lifted towards the end of last year, activity on this route seems likely to recover in the next 12 months.

This is a catalyst that I believe can significantly increase IAG’s stock price. When the company begins to see a significant rise in activity on the London / New York / London route, it could mean that the global long-haul industry is also on the way to recovery.

This can help improve investor sentiment and, more importantly, generate the cash flow that businesses need to reduce their debt.

Future tasks

Despite the potential, some serious headwinds can hinder the recovery of the IAG. These include the possibility of another variant of the coronavirus, which could re-close the global aviation industry. Rising fuel prices can hurt profit margins, and inflation can undermine consumer demand.

Nevertheless, despite these challenges, it would be great if IAG could be purchased as a speculative investment that could be upgraded when activity on the transatlantic route regained.

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Rupert Hargreaves does not have a position in any of the shares mentioned. The Motley Fool UK does not have a position in any of the shares mentioned. 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, given the various insights, A better investor than us.

If this happens, I think IAG’s stock price could rise. If this happens, I think IAG’s stock price could rise.

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