The Motley Fool

If you can stomach the turbulence, I’d buy these airline stocks

Image source: Getty Images.

Airline stocks have evidently been one of the worst affected sectors of the coronavirus pandemic. With heavy restrictions on travel, airlines have been forced to ground their fleets, part ways with a host of their workers and receive government loans to bail them out. But this has left these airline stocks extraordinarily cheap. Therefore, I’d consider buying the following three.

A high-growth airline stock

Wizz Air (LSE: WIZZ) is the first airline stock that piques my interest. The FTSE 250 member is a low-cost airline that is the market leader in Central and Eastern Europe. It has seen tremendous growth over the past few years, with operating cash flow jumping from c.£178 million in 2015 to c.£421 million last year.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Although Wizz Air passenger numbers have fallen by 98% recently, it is still in a strong position to survive the crisis. Unlike other airline firms, Wizz Air has avoided buying back shares or paying a dividend. This has helped provide liquidity to deal with the crisis and I can certainly see a long-term recovery.

A multinational FTSE 100 airline

International Consolidated Airlines Group (LSE: IAG) is the owner of airlines such as British Airways, Iberia and Aer Lingus. IAG shares have been damaged more significantly than other airline stocks, falling by around 70% since February. Management has also stated that passenger demand will not return to 2019 levels for many years.

But I’m confident that IAG will survive the crisis, albeit in a slightly damaged form. The airline has attempted to preserve funds by announcing job cuts, grounding the majority of its fleet and cancelling its dividend. At the end of the first quarter, IAG also had total cash and undrawn facilities of c.€9.3 billion. Whilst I don’t see IAG thriving over the next few years, I still believe that there will be a major recovery from its recent lows.

A British low-cost airline

The final airline stock to consider is easyJet (LSE: EZY). This FTSE 100 firm has also taken a battering due to coronavirus, and easyJet shares have fallen by over 65% since February. This has been exacerbated by disputes between the founder, Sir Stelios Haji-Ioannou, and the easyJet board. This has revolved around the company’s £4.5 billion deal with Airbus for 107 planes.

Even so, I am confident that easyJet will survive the crisis. For example, it has managed to secure a £600 million from the Treasury and will also borrow another £407 million from commercial creditors. This means that it should be able to survive at least nine months without flying. With a price-to-book value of 0.7, the airline stock is also extremely cheap and offers an opportunity to investors.

This means that I view each of these airline stocks as a long-term buy. For risk-averse investors, these stocks are simply too volatile to touch. But whilst the short-term direction of these stocks is impossible to predict, I believe that they will all be able to recover over the next few years. 

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Stuart Blair owns shares in easyJet. The Motley Fool UK has recommended Wizz Air Holdings. 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.