I’ve been looking at these two FTSE 100 stocks after they crashed last week. I always like to review the past week’s biggest stock price movers. Sometimes it allows me to uncover some news I may have missed. At other times, I’m able to find buying opportunities as share prices can fall too far after a negative company update.
Let’s take a look at two FTSE 100 stocks to see if I should buy them for my portfolio.
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A Covid-related crash
International Consolidated Airlines (LSE: IAG) is the first stock I’m looking at. The share price was down a huge 11.5% last week. This made it the worst performing stock in the FTSE 100.
It’s easy to understand why the stock crashed. In fact, the share price was up on the week prior to Friday, the day the new Covid strain spooked global stock markets. International Consolidated Airlines is the group that owns British Airways, Aer Lingus and other brands. Any further pandemic-related lockdown and travel restrictions will prolong the company’s difficulties. The UK has already imposed a temporary flight ban on six countries where the new strain has been detected. I expect further travel restrictions to follow.
In the company’s third-quarter results to 30 September, passenger capacity increased to 43.4% of 2019 levels (pre-Covid), and up from 21.9% in the second quarter. This suggests the business was improving. International Consolidated Airlines is still forecast to make a hefty loss in 2021 of £3.1bn. But next year, a forecast for revenue growth of 133% was expected to generate a £455m net profit. If the company achieves this growth, then the share price may begin its ascent back to where it was in 2019 at around 500p. This would be a huge return on the current share price of 131p.
I just can’t see that revenue growth happening now after the news last week. This is a sector that has been affected big-time by the pandemic, and there’s always a risk of a new Covid strain. It makes the sector, and unfortunately International Consolidated Airlines, uninvestable for me today.
Another FTSE 100 stock
The second-worst FTSE 100 company last week was Flutter Entertainment (LSE: FLTR) after the share price fell a huge 11%. The company is a global sports betting and gaming provider, owning brands such as Paddy Power and Betfair.
The gambling sector has been given a big growth boost in the US lately. The country has begun to legalise sports betting across the country after a ruling by the Supreme Court. Indeed, in Flutter Entertainment’s recent third-quarter trading update, online revenue in the US grew 85% over the same quarter in 2020.
However, since this update, the share price has fallen from 140p to 103p at time of writing. Overall profit was downgraded due to unfavourable sports results and a temporary closure of its Dutch operations.
Then, last week it was revealed that 160 members of Parliament are demanding the government takes action to reform the gambling sector in the UK. The impacts could be significant for Flutter as the UK and Ireland represent the largest proportion of its revenue.
Has the recent share price weakness presented a buying opportunity? I think the potential for growth in the US is very attractive. But my concerns over extended regulation mean I won’t be investing in the shares today.