It’s been a funny old year for the stock market. For many of us, the Covid-19 pandemic could well be the biggest global event of our lives. The turbulence felt in the market in the last 12 months has echoed that.
The initial crash that followed the arrival of the pandemic is now making way for a new market rally. But there are many sceptics who think that stocks are currently overvalued. They worry we could be in for another crash in the months ahead.
Of course, much of that depends on the course of the pandemic, and success or otherwise of vaccine programmes around the world.
During difficult times, I like to see where the opportunities lie in the market. That’s why I bought shares in FTSE 250-listed airline easyJet (LSE:EZJ) last year. Now, the share price is currently around 825p, only slightly higher than when I bought in June 2020.
So, do I now buy more, hold, or sell? Here’s what I’m planning to do.
Why did I buy easyJet shares?
A global pandemic and a massive, worldwide reduction in international travel for both business and leisure — terrible time to buy shares in an airline, right?
By the end of March 2020, easyJet’s market capitalisation had lost two-thirds of its value. Investors must have been wondering if the airline and the industry would survive.
However, I was sure that, at some point in the near(ish) future, we would return to a normal way of life. It might not look exactly the same, but international travel would once again become part of our work and leisure lives.
With that said — I also assumed that easyJet would be able to weather the storm and be there when demand for flights restarts. Whether that restart is in three months, three years, or 10 years.
How do I feel about EZJ now?
The easyJet share price has recovered 44% of its value in the last six months. Even so, it still trades well below the 1,500p price tag it had pre-Covid-19.
As a fellow Fool has pointed out, there does seem to be a little confusion about new CEO Johan Lundgren’s strategy of heading a little more upmarket to compete with the likes of British Airways, owned by International Consolidated Airlines Group (LSE:IAG). Given the current climate, it might be wiser for the company to stick to the budget brand it is known for.
It may take longer that I’d thought to see generous returns on my investment, but I still believe the shares are worth more than I paid for them.
I expect there will be a boom for the business when travel restrictions are lifted. People will be keen to spend their spare cash on holidays, I think, once the doom and gloom has been put in the rear-view mirror.
As a result I’m still optimistic about the easyJet share price, and I’d still add the stock to my portfolio or Stocks and Shares ISA.
