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The IAG share price leaps 47% since January. Should I buy now?

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British Airways
Image source: British Airways

The shares of International Consolidated Airlines Group (LSE: IAG) have been on a brutal roller-coaster ride since 2019. Shares in the owner of airlines British Airways, Iberia, and Aer Lingus collapsed spectacularly in 2020, before staging a stunning comeback. The IAG share price is up over a quarter in the past six months, rising 25.2% since 9 December. What next for this recovering stock?

The IAG share price crashes

Go back three years and the IAG share price was flying as high as a long-haul jet. In late June 2018, the shares were close to £5. But they suffered a tough 2018/19, diving below 290p by late August 2019. The stock then staged a strong recovery, bouncing back to 458p in mid-January 2020. Alas, Covid-19 infections then swept the globe, borders were closed, and air miles travelled collapsed.

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With passenger air miles crashing by four-fifths (80%) last year, the IAG share price duly followed suit. Over the next eight months, the shares descended like an emergency landing. On 29 September 2020 (less than nine months ago), the stock was on its knees, hitting a lifetime closing low of 91p. For IAG shareholders, 2020 was easily the worst year since the group’s creation in January 2011. But, as the old saying goes, it’s always darkest before the dawn — and the IAG share price has since skyrocketed.

IAG comes back from the dead

The best possible news for the IAG share price arrived in early November. This was when the world learned of the existence of several highly effective vaccines against Covid-19. At last, we had real hope for a world free of the coronavirus pandemic. Of course, this sent the IAG share price soaring like Concorde. At the end of 2020, it closed at 159.8p, up almost 69p — more than three-quarters (+75.6%) — from its late-September low.

The good news for IAG’s shell-shocked shareholders is that the shares have continued to soar in 2021. As I write on Wednesday afternoon, they stand at 204.5p, up 8.59p

What next for this popular stock?

With the IAG share price rising by 28% so far this calendar year, what next for this widely held share? Experience has taught me not to predict the future, but I see IAG shares today as sitting on a knife-edge. If all goes well with Covid-19 vaccinations and infection controls, then IAG could well be one of the best FTSE 100 stocks to hold for a post-Covid-19 recovery. After all, it won’t take much for the group’s yearly revenues to beat the rock-bottom €7.8bn recorded in 2020 (versus €25.5bn in 2019). Then again, the shares have already surged by nearly half (+47.1%) since dipping to close at 139p on 27 January.

For me, the IAG share price is a straight play on life returning to normal post-Covid-19. If this process is fast and smooth, then I expect IAG shares to follow suit. But if there are any big bumps on this road to recovery, then I expect similar volatility from this stock. In short, I fully expect the shares to be higher than their current level later in 2020/21. But I don’t own IAG stock at present — and I’d need to see clear signs of recovery before it goes on my buy list.

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK 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.

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