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There are several different stock options that are too good to ignore. To elaborate, I’m talking about companies with strong cash backbones, located in vital sectors, and that have been forced lower by a combination of inflation, Covid-19 hangover, and rising interest rates. Today I am focusing my attention on easyJet (LSE:EZJ) shares.
Put all tables away and make sure you are upright
During the first weeks of this year, air traffic in and around Europe has reached 83% of what it was in 2019, with the majority being low-cost airlines. easyJet’s holiday arm generated a profit of £13m, up from a loss of £1m a year ago, signaling a peripheral shift in travel across the region.
While easyJet posted another loss of around £130m, I have to note that this was a £100m improvement on the previous year. In addition, with a tasty growth in the number of passengers (47%), the company reported a revenue growth per seat of 36%. Along with the plugin additions, the engine is starting to get going. On top of this, demand from British tourists is on the rise, with 60% of their summer holiday targets already sold.
Keep your seat belt fastened in turbulence
The break-in time for easyJet to go live has been touch and go for investors. Daily flight numbers are still not what they were in 2019, currently around 60%.
Some would say bad luck is a factor here, with two of easyJet’s main transport hubs, London Gatwick and Amsterdam, imposing localized capacity restrictions to handle activity spikes in the summer, with Amsterdam continuing until April of this year. anus.
easyJet is a company that I have personally been watching since the 2019 pandemic; the price fell from £1,320 per share to £343, a 73% drop. It rallied 163% through mid-2021 before inflation, a second Covid-19 scare and a drop in consumer appetite forced the share price down to £275, another 70% drop. Granted, I couldn’t get in here, but I was able to get in for £320. Shares are currently 61% above this low.
It is no longer a round trip but one way
The significant factor facing the aviation industry is the global transition to sustainable fuel sources. Electricity is not an option, so it will be hydrogen, specifically green hydrogen. easyJet is one of the few airlines that has been receptive to this move, conducting test flights and providing positive rhetoric towards the transition.
Unless things change, I would look to increase my holdings in easyJet if the shares fell to around £456. However, looking ahead to the rest of this year and growing demand, easyJet has its rise on the horizon.
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