The FTSE AIM is filled with hidden gems — one of which is Jet2 (LSE:JET2). The company recently reported blowout numbers for its full-year results. But with the Jet2 share price taking a dip since, investors may want to consider the stock while it’s cheap.
Flying on all cylinders
The skies are looking bright for Jet2 despite some recent turbulence in its share price. The firm reported a tremendous set of full-year results where revenue tripled to over £5bn. Jet2 also returned to profitability, reporting a diluted EPS of 126.6p and even declared a dividend of 8p per share.
With travel showing no signs of cooling, profits and passenger numbers have also soared to new heights. Nonetheless, that didn’t matter as FTSE investors sunk the stock as long-time Chairman Philip Meeson announced his intention to step down from his role next year.
Even so, the board was quick to reassure shareholders that clear skies lie ahead. Jet2 recently surpassed its rival, TUI as the UK’s largest tour operator. What’s more, the travel operator has a treasure chest of over £2.63bn in cash, even after buying new planes.
So while economic storms may rock the market, Jet2 seems well-positioned to navigate any headwinds. The group’s resilient all-inclusive holiday business model is expected to attract travellers in both good times and bad.
A headwind to consider
While the future looks bright for the FTSE AIM stalwart, some competitors aim to rain on their in-flight parade. Most prominently, easyJet has been expanding into holiday packages and nipping at Jet2’s market share.
easyJet CEO Johan Lundgren has made no secret that he wants the top spot in the UK packaged travel market. And with a rapidly growing share already at 5% of the market, the FTSE 250 budget airline trails close behind Jet2’s 15% chunk.
As such, more competition means Jet2 must keep costs low and its proposition high to maintain its advantage. However, Jet2 can hold its weight against easyJet too. It has brand recognition on its side as customers trust its reputation for good value and reliable service.
Best FTSE airline stock to buy?
Looking ahead, the Jet2 share price may encounter some bumpiness. Nevertheless, it’s still positioned to reach new heights given the travel sector’s positive outlook, as well as the stock’s relatively cheap multiples.
High inflation and interest rates may potentially reduce discretionary spending on travel, but analysts remain optimistic. Its profits are projected to grow over 20% next year. And given its cheap valuation, robust financials, and leading market share, I think investors should feel assured.
Additionally, the airline has 98 aircraft on order with plans to expand its capacity and routes. Therefore, by providing great value and an improving customer proposition, Jet2 can even capture market share during challenging times.
The skies are rarely completely clear, but Jet2 has a proven flight plan to navigate obstacles and achieve cruising altitude. With an average price target of £18.25, Jet2 shares seem to have the biggest potential among its FTSE airline peers at over 60% from its current share price.
