I’d avoid the IAG share price – I think this 2020 top performer will soar further in 2021

This Fool explains why he is avoiding the IAG share price and instead looking at a 2020 top performer for 2021 and beyond.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The global pandemic hit few companies harder in 2020 than IAG (LSE:IAG). Covid-19 and the economic downturn managed to wipe out thousands of jobs and billions in revenue. The outlook for 2021 is uncertain too.

The IAG share price was one of the biggest losers of 2020, which is why I am avoiding it and looking elsewhere to bolster my portfolio.

IAG share price woes

On 4 January 2020, I could purchase IAG for 454p per share. As I write, the IAG share price is hovering near 140p which is close to a 70% decrease in value. The global pandemic grounded planes and placed billions across the world in lockdowns. Public health measures included severe travel restrictions for months on end which decimated the airline industry.

While 2020 was a year to forget, there is a chance 2021 could be better. Personally, however, I am not convinced right now.

The IAG share price did receive a boost in November. At that time, successful Covid-19 vaccine results provided a rare spark for the whole of the stock market. In addition, the British Airways owner also has a resilient balance sheet which could help in 2021 and beyond.

However, a number of new strains of Covid-19 have caused further setbacks for IAG and the airline industry. Also, the UK will not complete its vaccine rollout until at least September. This means a summer holiday may be out of the question and impact airlines further. The IAG share price is currently on my no fly list.

FTSE 100 stock flying high

Ocado Group (LSE:OCDO) was one of the top performers for 2020. Its share price nearly doubled and trading levels increased exponentially due to the pandemic. In fact, its share price over the past five years has risen nearly 850%! The online food shopping firm has seen a huge increase in trading due to the lockdown, which I believe could continue into 2021.

In its most recent trading update in December for Q4, Ocado showed an average of 360,000 orders per week. This is a 3% growth over the same period last year. In turn, revenue grew by close to 35% compared to the same period. This reporting period was before the third lockdown was announced. The addition of selling Marks & Spencer food through its retail division and unprecedented demand across its services has led Ocado to bolster its full-year profit forecast by an additional £20m and potentially more. It is also expanding into clothing and general merchandise too, which I believe is the first step towards global expansion.

I must admit that OCDO shares are expensive, currently trading at 2765p as I write, unlike the beleaguered IAG share price. However Ocado is priced for global growth at a rapid speed. This does mean any setbacks that occur may hit hard so that must not be ignored.

Ocado over IAG

The IAG share price isn’t of interest to me right now and I wouldn’t even view it as a contrarian buy. I will still keep an eye on developments, however. Instead, for 2021 and beyond, I see Ocado growing further and continuing its impressive rise. In addition to Ocado, here is a stock I see making me a passive income too.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

Just released: December’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »

Investing Articles

£9k in an ISA? Here are 2 FTSE 100 stocks to consider for a juicy second income

There are plenty of quality UK shares to consider when attempting to build a second income. Here are two high-yielders…

Read more »

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

No savings at 40? Just £5 a day invested in FTSE 250 stocks could unlock a £372k ISA

For the price of a coffee, Brits have a chance to build a healthy nest egg for their retirement. Here's…

Read more »

Investing Articles

Can I buy Elon Musk’s SpaceX on the stock market?

SpaceX is hot property and its valuation is surging. Dr James Fox explains how investors can gain exposure to Elon…

Read more »

A senior group of friends enjoying rowing on the River Derwent
Investing Articles

Considering an ISA for retirement? Here’s how investors could aim for £2,000 a month with dividend shares

Our writer outlines how a well-balanced portfolio of dividend shares in an ISA could lead to a decent stream of…

Read more »

Investing Articles

Here’s the BP share price forecast

BP's share price should be higher. That’s what analysts are saying, but things can move quickly in the hydrocarbons and…

Read more »

Investing Articles

Up 53% in 3 months! What’s fuelling the red-hot Burberry share price?

Harvey Jones is whooping it up as the dramatic Burberry share price recovery wipes out most of his losses in…

Read more »

Investing Articles

Should I aim for a million by holding just 10 shares?

Can Harvey Jones aim for a million in his ISA pot by investing in a broad-based portfolio of around 20…

Read more »