Despite a small increase in value over the past few months, the TUI (LSE: TUI) share price remains around 50% below the level at which it began 2020. As such, a quick glance at the stock may lead to the conclusion this business is undervalued. However, I don’t believe this is one of the best shares to buy for 2021.
I think plenty of other businesses offer better growth and income prospects than the TUI share price.
TUI share price headwinds
The primary headwind currently facing the company is the coronavirus pandemic. International travel came to a virtual standstill in 2020. And it looks as if we’ll see the same for at least the first six months of 2021.
What happens next depends on the speed of the global vaccine rollout and whether or not Covid-19 is successfully contained. If the virus isn’t controlled, the group could potentially face years of disruption.
Considering these challenges, I think it’s currently challenging to place a value on the TUI share price.
The stock looks cheap compared to history. But based on current analyst forecasts, the business isn’t expected to return to profit until 2022. And even on these optimistic projections, the company is only forecast to earn €0.22 (19.7p) per share in 2022. According to my figures, that puts it on a forward price-to-earnings (P/E) multiple of 17.
This seems to me to be far too expensive for a business facing so much uncertainty. Therefore, I think it could be sensible to avoid the TUI share price this year.
The best shares to buy
Instead of TUI, I’ve been taking a closer look at some of the pandemic’s winners. These include health & safety-focused firm Halma. This company has managed to weather the pandemic quite well, and has a successful track record of growing through acquisitions.
Health & safety will remain at the forefront of many people’s minds throughout 2021. So, I expect the business to continue to report growth in the medium term.
Some of the other companies I think could be the best shares to buy for 2021 are technology firms. These include anti-virus software companies Avast and Softcat. Technology has become a vital part of our day-to-day lives, and this isn’t going to change anytime soon. In fact, it seems as if the world is only going to become more reliant on technology from now on.
This could present opportunities for traditional firms, but also criminals. Cybersecurity is already a massive market, and it’s growing rapidly. By comparison, investors can’t be sure what the future holds for TUI shares. So much of the company’s future is now out of its hands.
For that reason, I think Avast and Softcat are some of the best shares to buy for 2021 and beyond. No matter what the future holds for the global economy, I think the cybersecurity business will only grow from here.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Softcat. 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.