Is the IAG share price too good to miss at current levels?

Jabran Khan delves deeper into the current state of play with the IAG share price and decides if now is a good opportunity to add the shares to his holdings.

| 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.

Stack of British pound coins falling on list of share prices

Image source: Getty Images

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.

sdf

Airline operator International Airlines Group (LSE:IAG) has had a tough couple of years since the pandemic started. With international travel demand now rising again, is the current IAG share price a good opportunity?

IAG share price currently

As a quick reminder, IAG is an Anglo-Spanish multinational airline holding company. Some of its best known brands include British Airways, Aer Lingus, Iberia, and Vueling.

Many aviation stocks have been hit hard since the pandemic began as planes were grounded. IAG was no different and the shares have been trading close to penny stock levels for some time.

So what’s the current state of play with the IAG share price? Well, as I write, the shares are currently trading for 124p. At this time last year, the shares were trading for 194p, which is a 36% drop over a 12-month period.

It is worth noting IAG shares have not returned anywhere near pre-pandemic levels before the stock market crash in March 2020. On 15 February 2020, the shares were trading for 426p, which means shares are currently trading for 70% less then at that point.

For and against investing

FOR: IAG is a large diverse business with multiple operations across many territories. It owns British Airways, one of the largest airlines in the world, which covers the lucrative transatlantic routes. On the other hand, it owns budget brands, such as Iberia, which carry passengers to holiday hotspots within Europe. These diverse operations could see it benefit from a surge in post-pandemic travel now Covid restrictions seem to be a thing of the past.

AGAINST: Current macroeconomic headwinds and inflationary pressures are causing issues for IAG, as wwell as other airlines. Fuel prices are at all time highs and consumer spending has been impacted too meaning bookings could slow down. This could have a negative impact on performance and returns, and I believe this is keeping the IAG share price from rising.

FOR: A price-to-sales ratio can offer insight into the value of a stock. A general rule of thumb is that the lower the price-to-sales ratio, the better value for money a stock may be. IAG’s current ratio is 0.7. On that basis, the shares do look decent value for money at current levels.

AGAINST: Competition in the airline industry has only intensified since the pandemic began. Both the transatlantic long-haul and budget markets are inundated with airlines and businesses trying to bounce back from pandemic woes. This competition could have an impact on performance as well as the IAG share price in the coming months.

What I’m doing now

I understand that IAG could continue to experience issues in the short to medium term due to macroeconomic issues. In addition to this, there has been a major shortfall in staffing levels at airports and airlines due to redundancies that occurred at the height of the pandemic. Recruitment to cope with rising demand has been slow.

I invest for the long term and I can see the IAG share price rising once more in the future. I wouldn’t add the shares to my holdings at the moment, however. The negatives currently outweigh the positives for me. I believe there are better stocks out there that offer better returns and more stability.


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. 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

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Low P/E ratios, yields up to 9%! Are these the FTSE 250’s best value stocks?

These FTSE 250 shares offer exceptional all-round value on paper. But are they too good to be true for investors…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Here’s how a 39-year-old could aim for a million by retirement, by spending £900 a month on UK shares

Our writer digs into the theory and practicalities of buying high-quality UK shares regularly to aim to retire as a…

Read more »

Businessman with tablet, waiting at the train station platform
Investing Articles

See how much a 50-year-old should invest to get a £1k monthly passive income at 65

Even at 50, there's still time to build a big enough stocks portfolio to generate a serious passive income at…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

With P/E ratios below 7, are these undervalued FTSE shares bargains — or value traps?

Low valuations aren’t always the bargains they seem. Mark Hartley takes a closer look at two FTSE shares trading at…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

3 simple strategies that can help drive success in the stock market on a small budget

Christopher Ruane runs through a trio of strategic moves he reckons can help an investor as they aim to build…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

2 growth stocks backed by this British fund that’s soared 77.8% in just 3 years!

Our writer likes the look of this under-the-radar fund, especially with a pair of exciting growth stocks near the top…

Read more »

Shot of an young mixed-race woman using her cellphone while out cycling through the city
Investing Articles

Is there value in Baltic Classifieds — a soaring growth stock that brokers are buying?

Baltic Classifieds has surged after broker upgrades. Mark Hartley asks whether this FTSE 250 stock is really worth buying now.

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

£20k in an ISA? Here’s how it could be used to target £423 of passive income each month

Earning money from dividends in an ISA is one way to set up passive income streams. Our writer explains how…

Read more »