A lot has been made of the IPO from Space Exploration Technologies. Indeed, the current price of SpaceX shares means the company has a whopping $2.05trn market cap. However, after some thought, I’ve decided the company is overvalued; there are other options available. Here’s one that looks appealing to me.

To infinity and beyond

I’m talking about AST SpaceMobile (NASDAQ:ASTS). To be clear, AST isn’t trying to launch more rockets or sell satellite dishes. Instead, it wants to turn ordinary smartphones into satellite-connected devices. The company is building a constellation of large low Earth orbit satellites designed to beam cellular broadband directly to smartphones. This will allow people to connect where traditional signal towers cannot reach.

So it is still a space-sector stock, but in some ways a bit lower-risk than SpaceX and other peers. AST has signed agreements with major telecom operators already, with pending revenue-sharing deals set to offer customers coverage in rural and remote locations.

Q1 2026 results showed modest revenue of $14.73m, but maintained its full-year revenue guidance of between $150m and $200m. With the target of approximately 45 satellites in orbit by the end of 2026, things are starting to get exciting.

The relative appeal

Don’t get me wrong, space as a sector is high risk. However, what I like about AST is the size of the opportunity. Billions of people still experience unreliable mobile coverage. If AST can make satellite connectivity seamless, the addressable market could be enormous.

When I compare it to SpaceX’s Starlink, there’s a clear difference. SpaceX’s Starlink is a phenomenal business, but AST is targeting existing cellular networks rather than trying to replace them. Starlink generally requires dedicated hardware, while AST will connect phones that people already own. That could make adoption much easier if the technology works at scale.

Further, with a market cap of just over $28bn, it has the legs to move much higher than SpaceX.

Valid concerns

AST is still a long way from proving it can become a highly profitable company. Building and launching satellites is extremely expensive, and the company will need billions in capital before the network is fully deployed.

Further, the stock is up 37% in the past year, but down 39% in the past month. It’s a highly volatile stock, which might put off some investors. However, for those who want exposure to this sector and are happy with the risk level, I think it’s a more appealing purchase to consider than SpaceX right now. I believe it has more scope to rally as the space theme takes off, and huge potential to connect with existing providers at a rapid rate. That’s why I’m seriously thinking about buying a small amount of stock.

Should you invest £5,000 in AST SpaceMobile right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if AST SpaceMobile made the list?

Jon Smith has no positions in the shares mentioned.

The post Forget SpaceX shares! This US space stock looks a lot more attractive to me appeared first on The Twelfth Magpie.

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The resignation of UK Prime Minister Kier Starmer on Monday (22 June) means that Andy Burnham is in prime position to take over the role in July. Of course, we’ll have to wait and see if any other contenders come forward, but I believe he’s the overwhelming favourite.

When it comes to how the market could react, the FTSE 250 is likely going to be more volatile. But why?

Mapping out scenarios

To be clear, I don’t believe we’ll see much initial reaction when/if Burnham gets confirmed as PM. I think most of this has already been factored into the stock market. However, the real move will come when he lays out his policy plans.

For the FTSE 250, the reaction will likely be high, as it’s home to more domestic companies that just trade in the UK than the FTSE 100. If investors conclude Burnham means higher business taxes, more regulation, rent controls and higher wage pressure (to name just a few points), stocks could fall. That would matter particularly for property stocks, as well as consumer discretionary firms such as pubs and retailers.

On the flipside, Burnham’s political brand isn’t purely anti-business. In fact, as Mayor of Greater Manchester, he built credibility in regional development, focusing on transport and infrastructure that helped the local economy.

If he appoints a market-friendly Chancellor and avoids broad-based corporate tax hikes, the FTSE 250 could rally. Again, this is likely more sensitive than the FTSE 100 because we’re talking about a credible domestic growth agenda that would naturally see investors rotate into domestic companies.

One to watch

One company that could do well in the second scenario is Keller Group (LSE:KLR). The stock’s up 80% in the past year, fuelled by record financial results. Back in March, the latest report put the strong numbers down to “sustained improvement in operational and financial performance and the Group’s geographic diversity, sector agility and resilience”.

When looking at the company through a Burnham lens, it could do well with a big push in infrastructure spending. Keller does ground engineering, so it’s the first company in before homebuilders or other contractors take over a site. So if we get a government push in this area, it could win a lot of contracts for foundations and major civil works.

It’s appealing as it’s less dependent on house prices than builders, and also has global revenues. So even if the political angle doesn’t work, it’s not the end of the world.

In terms of risks, it’s true that any infrastructure project takes years to plan, start, and finish. So the boost to Keller Group could take a long time to filter down to profits. Yet even with this point, I still think the company’s in a good spot and could be considered by those who think the new PM could push this agenda point.

Should you invest £5,000 in Keller Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Keller Group Plc made the list?

Jon Smith has no positions in the shares mentioned.

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After going public on 12 June at $135, Space Exploration Technologies (NASDAQ:SPCX) stock rallied to over $200 last Tuesday (16 June). However, the SpaceX share price has since started to move lower and, in my view, is already showing some warning signs. Here’s what’s going on.

Thin air so high up

The excitement around the largest IPO ever was incredible to see, but now that initial buzz has cooled, the stock faces a reality test. When a company attracts huge demand before going public, investors often focus on the dream rather than the details. But now I think people are starting to think more clearly about whether the valuation based on the current share price is really justified.

For example, after the initial surge, the market-cap is $2.5trn. This puts it in the same area as Microsoft and Amazon. In 2025, SpaceX generated roughly $18.7bn in revenue and posted a net loss, whereas Amazon generated over $716bn in revenue.

Further, SpaceX trades at a steep premium (over 100 times trailing sales). Of course, some of the optimism reflects high investor expectations for its Starlink broadband service and broader AI and digital ecosystem ambitions. But I think the current share price is too high given what the business has proved so far.

I’m pretty sure I’m not the only one with this view, and so that broader worry could create selling pressure. Shareholders may start comparing the company’s price tag with its actual financial performance.

If expectations are already extremely high, even strong results or bold forward-looking ambitions may not be enough. The company may need to deliver years of rapid growth to justify investor optimism.

The present versus the future

What I think the problem boils down to is that SpaceX’s valuation has been built around its potential. The company has major opportunities, including satellite internet through Starlink and reusable rocket technology.

However, investors may become impatient if growth slows or profitability takes longer than expected. Given how high the current share price is, it’s almost the case that it’s already priced for perfection. As a result, it can fall sharply if the story becomes merely good instead of exceptional.

Of course, SpaceX does have huge potential, and we shouldn’t ignore this. The company has achieved something incredible already in that it’s turned space technology into a scalable commercial business. Its reusable rockets have transformed the economics of launches, and Starlink could become a major recurring revenue platform.

It can tap into large government demand for space services and even defence contracts, which is a great source of revenue. However, the size and scale of future deals remains to be seen.

On that basis, even though I do think the company can do very well going forward, I’m waiting for the stock to trade at a more reasonable valuation before buying, and think investors with the same view as me can do the same.

Should you invest £5,000 in Space Exploration Technologies Corp. - Class A right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Space Exploration Technologies Corp. - Class A made the list?

Jon Smith has no positions in the shares mentioned.

The post Why the SpaceX share price may soon face a stern reality test appeared first on The Twelfth Magpie.

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Even though most of the best-performing stocks so far in 2026 have come from the AI and tech space, other stocks have done well. In fact, one FTSE 250 stock has caught my eye after a strong 50% gain already so far this year. So what are the details?

Reasons for optimism

The company I’m referring to is the Watches of Switzerland Group (LSE:WOSG). The stock had been underperforming for some time, mainly around concerns over slowing luxury demand and weaker profit margins. However, that picture’s now changing.

Back in May, a full-year trading update said the company noted “growth accelerating across the business and strong underlying momentum as we continue to scale”. The stock’s easily beating the broader FTSE 250, which is up 3% so far this year.

Even though some in the UK might be sceptical about the demand for luxury timepieces, it’s actually the US market that’s been driving results. The US was referred to in the update as “the primary engine of growth“, with revenue up 24% in constant currency to £927m and now accounting for over half of Group sales.

It’s true that luxury watches remain highly desirable among affluent American consumers, and Watches of Switzerland has invested heavily in expanding its presence there. It’s also being helped by acquisitions such as Roberto Coin’s North American jewellery business.

Another reason investors have become more optimistic is that the company isn’t only targeting people to buy new watches, but is pushing cheaper pre-owned alternatives. This not only opens up the market to more people, but can help yield results in markets where consumers might be tighter with spending.

It’s clearly working, with pre-owned sales up 22% versus the prior year, and a continued focus on the roll-out of Rolex Certified Pre-Owned in the UK portfolio.

What lies ahead

The shares could continue rising if several things go right. The big factor would be whether luxury demand can continue to recover as consumer confidence improves (especially in the UK). Next, the US expansion could continue driving higher-margin growth, which now would have a much larger financial benefit given its size overall.

Incredibly, the stock’s still down almost 50% from the start of 2022, suggesting there’s significant scope to rally before the share price looks overvalued.

However, there are risks. Luxury spending is cyclical, and expensive watches are among the first purchases consumers delay during economic slowdowns. Even though the US market’s doing well, the outlook for us here in the UK and other geographies for the firm isn’t that rosy.

So on balance, even though the stock’s doing well relative to the market, I’m not sure I need a luxury consumer discretionary stock in my portfolio right now. On that basis, I’m going to pass on this opportunity.

Should you invest £5,000 in Watches Of Switzerland Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Watches Of Switzerland Group Plc made the list?

Jon Smith has no positions in the shares mentioned.

The post Up 50% this year, this FTSE 250 stock’s smoking the index appeared first on The Twelfth Magpie.

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When targeting a high passive income, an investor needs to tweak their strategy for buying dividend stocks. Depending on the time horizon, the risk likely has to be increased as well. But when we put everything together, it’s by no means impossible to target four figures in dividend income per month. Here’s how.

Bumping up the yield

For income investors, a dividend yield of around 4%–5% is arguably the sweet spot for sustainable income without entering high-risk territory. This can be increased to 5%–7%, but the scope to find a diversified portfolio of companies starts to thin out a little.

Yet when we’re talking about generating a sizeable amount of income, ideally, an investor will be looking to buy stocks with a yield in excess of 7%. This is because it can allow the portfolio to compound at a faster rate, making the existing money work harder, and ultimately reducing the time it takes to reach the income goal.

Of course, buying UK stocks with yields above 7% can mean there are some risky companies that might not be able to sustain the same level of payouts for years to come. But there are still some gems out there with high, sustainable yields.

Talking figures

In terms of numbers, let’s say an investor can spare £1,000 a month. I’ll assume an average yield of 8%. If this were kept up over time, the portfolio would pay out an average of £2,999 monthly just after year 17.

Of course, this might seem a long way away. If the yield was increased to 10%, this time would fall by two years. Or if the yield was kept at 8% but £1,500 was invested each month, it would take just under 14 years.

A good example

In terms of a stock that could be considered, there’s AEW UK REIT (LSE:AEWU). The stock is down 1% in the last year and has a dividend yield of 7.86%.

The real estate investment trust (REIT) owns a portfolio of commercial properties across the UK. Rather than building properties from scratch, the company focuses on buying undervalued assets, improving them as needed, and collecting rental income from tenants. REITS also have tax advantages.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

The business model is fairly simple, as the firm makes money by owning property. Tenants pay rent, and after operating costs and interest expenses are covered, much of that income can be distributed to shareholders as dividends.

One reason the dividend looks attractive is that it is supported by recurring rental income. Unlike a traditional company where profits can swing dramatically depending on sales, property owners often have long leases that provide visibility over future cash flows. Evidence of this was seen in the latest quarterly update, where “for the 42nd consecutive quarter” the board approved the 2p dividend per share.

It’s true that one risk is the cost of debt. The REIT has to take on borrowings in order to finance new projects. However, the current fixed rate of interest as of May is 2.96%. This is low relative to the base rate of 3.75%, so it’s managing the risk well for the moment.

Overall, I think it’s a good stock to consider for investors looking at this income strategy.

Should you invest £5,000 in Aew Uk REIT Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aew Uk REIT Plc made the list?

Jon Smith has no positions in the shares mentioned.

The post How much is needed to target a £2,999 monthly passive income? appeared first on The Twelfth Magpie.

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The Aston Martin (LSE:AML) share price has been trending lower for several years. However, I have the stock on my watchlist, like others, on the premise that one day it may be too cheap to ignore. When I wrote about the company a month ago, I said it wasn’t the right time to buy. If I had decided to buy then with £2k, here’s what it would now be worth.

Another tough month

The stock is down a further 15.6% in the past month, meaning the £2k would currently be worth £1,688. I should note that this is an unrealised loss, and would only actually be realised if the investor sold today.

However, it accurately shows that sentiment towards the company has not improved in recent weeks. Interestingly, since the Q1 results came out in late April, the business hasn’t put out any fresh financial updates that could have negatively impacted the share price. So the move really has been investors carrying over disappointment from the results, along with a lack of any positive catalysts to stop the trend lower.

The results showed a desperate rush to raise funds to help cash flow problems. For example, it spoke of a “new £50m committed facility with certain members of the Yew Tree Consortium” as well as “the completed sale of the Aston Martin F1 naming rights to AMR GP”, both of which boosted the bank balance.

Yet with the business generating a Q1 loss of £65.5m, there still isn’t much good news to shout about.

Looking ahead

There are plenty of reasons why the share price could head lower still. Weak deliveries, disappointing financial results, or further delays to product launches could damage investor confidence. Competition in luxury vehicles is also increasing, particularly as electric vehicles become more important. Aston Martin needs to successfully transition while protecting its brand identity, which isn’t an easy task (or one it’s doing well at the moment).

However, I don’t want to sound completely gloomy. Aston Martin remains one of the world’s most recognisable automotive brands. The company has a refreshed product pipeline, including high-performance models designed to attract wealthy buyers and strengthen margins.

Further, it seems like it has no problem raising more funds to help finance operations. Even though this isn’t sustainable in the long term, it can keep the company afloat for the coming couple of years, with the aim of turning it around by then.

Ultimately, my position is the same as it was last month. I don’t see any catalyst that’s likely to spark a rally in the stock, so I’ll be staying away. There will come a time when it becomes a screaming value purchase, but I don’t think we’re there yet!

Should you invest £5,000 in Aston Martin Lagonda Global Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aston Martin Lagonda Global Plc made the list?

Jon Smith has no positions in the shares mentioned.

The post £2k invested in Aston Martin shares a month ago would currently be worth… appeared first on The Twelfth Magpie.

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Most of the time, investors who prioritise high growth have to sacrifice dividend potential. So with the ongoing theme of artificial intelligence (AI), it can be tough to find companies that are benefiting from and implementing AI while still paying out income.

Yet for income investors, this isn’t the end of the road. Here are two I’ve spotted that offer generous yields while still pushing the AI narrative.

Top of the yield board

First up is Legal & General (LSE:LGEN). It currently has the highest dividend yield in the FTSE 100 at 7.65%, with the share price up 13% in the last year.

It’s actively embedding AI across its entire business to automate manual tasks, optimise investments, and improve the customer experience.

For example, it’s using AI to give customer service agents real-time account views, along with tools that suggest relevant next steps and evaluate call sentiment. This saves time, boosts efficiency, and improves the customer experience, helping to retain more clients (and assets under management).

It’s also starting to use AI on the investment side, but I think it can do a lot more in this area. I’m talking about aiding risk management, spotting potential financial issues and more. Again, this should help the company be more efficient and profitable, directly benefiting the share price over time.

On the income side, it’s steadily been increasing the divdiend per share over the past five years, and the dividend cover is comfortably above 1, so I don’t see any immediate risks here. However, one issue for the company is the regulatory environment, which could tighten and therefore negatively impact its potential to make higher profits.

Tapping AI server demand

Another company is National Grid (LSE:NG). Some might be surprised by this pick, but stay with me. Late last year, it partnered with Emerald AI to use software as a smart mediator between its electricity network and AI server farms. The system dynamically changes power and workloads depending on grid demand. This basically helps to provide a more efficient and flexible operating system for the company.

From an investor’s perspective, this should help to reduce downtime and outage costs, as well as help to grow revenues because consumers and businesses will have more confidence in using the National Grid network.

When looking at dividends, a utility company like National Grid has a strong history of paying dividends. The dividend yield’s 4.06%, with the share price up 16% in the past year. The management team targets an average payout ratio, which is hovering comfortably around 80% of underlying earnings. Further, it tracks its annual dividend increases directly to UK inflation, which will comfort some investors.

Overall, I think both stocks could be considered by investors who want exposure to AI but also want to own income shares.

Should you invest £5,000 in Legal & General Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General Group Plc made the list?

Jon Smith has no positions in the shares mentioned.

The post 2 juicy income shares with big exposure to AI appeared first on The Twelfth Magpie.

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A second income can be very helpful for someone trying to make a bit of extra cash on the side. There are plenty of ways to achieve this, with my favourite being dividend shares. So,if someone had a lump sum of £10k that they were looking to maximise the return on, what numbers could be possible?

Finding the right balance

On the face of it, they could simply put all of the money in a stock like the Renewables Infrastructure Group. It has a yield of 10.09%, meaning our investor could expect to receive over £1,000 a year from their lump sum. That’s one of the highest-yielding options across the FTSE 250 and FTSE 100, so it’s a good indication of the maximum one could target.

However, this might not be the most sustainable strategy. If the company cuts its dividend in the future, it could materially affect its income. Based on this, our investor could instead pick a firm with a long history of paying dividends but a much lower yield of 2% or 3%.

The problem with this is it doesn’t maximise the potential income. So in reality, I believe the best way is somewhere in between. Imagine the £10k is split across 10 stocks, with a target yield of around 5%-7%. This provides diversification, so any impact on the portfolio from one company is manageable. It also provides a yield almost double the index average, so it’s still squeezing plenty of juice out of the lemon.

Ultimately, I think a second income around the £500-£700 mark per year is possible from this. Over time, if this money is put back into the stock market, the funds can compound faster, meaning the income could grow even more.

Potential option

The next step is to try and find stocks to include. One example is Aberdeen Group (LSE:ABDN). The company’s core operations revolve around asset management, where it earns fees by investing and overseeing client capital. Like many fund managers, Aberdeen’s revenue model is largely based on assets under management (AUM), meaning the more money it manages and the better it retains clients, the more recurring fee income it can generate.

Over the past year, the stock is up by 26%. Part of this is reflected by the growth in AUM, which hit £556bn in the latest full-year results, up from £511bn the year before. This helped to filter down to an profit before tax of £442m, a sharp jump from £251m in the previous period. Ultimately, this acts to make the dividend payments sustainable. The current dividend yield of 6.23% is within the strategy’s target range.

Looking forward, I think the dividend is sustainable because Aberdeen’s business does not require significant capital investment to operate. The company does not need to build factories or constantly reinvest billions into equipment. Instead, cash generation depends mainly on managing assets efficiently, controlling costs, and keeping clients invested

Of course, Aberdeen isn’t risk-free. Asset management is a crowded industry, with low-cost passive funds putting pressure on more active peers like Aberdeen and their higher fees. But, on balance, I think it’s a good stock to consider.

Should you invest £5,000 in aberdeen group right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if aberdeen group made the list?

Jon Smith has no positions in the shares mentioned.

The post How much second income could I make from £10k in the stock market? appeared first on The Twelfth Magpie.

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SpaceX is by far the hottest US stock right now. After going public last week, the stock has amassed a market-cap of over $2.5trn.

Despite some optimism going forward, I believe there are other S&P 500 stocks that could outperform SpaceX in the period ahead. Here’s one I’m considering.

Looking to healthcare

I’m talking about Eli Lilly (NYSE:LLY). The stock’s up 41% over the past year. I know it isn’t an obvious choice to begin with, but I think there’s merit in looking beyond AI and tech companies for once.

While SpaceX has captured investor imagination with rockets and Starlink, Eli Lilly has something that often matters more in the stock market over time. I’m talking about having a business already producing enormous cash flows from a product category that is changing millions of lives.

The biggest reason Eli Lilly could beat SpaceX’s returns this year is its position in the weight-loss camp. The company’s drugs in the GLP-1 category have been incredibly popular.

The Q1 results showed that total revenue hit $19.80bn, up 55.5% versus the same period last year. The GLP-1 Mounjaro saw revenue surge 125% to $8.66bn. Incredibly, the Foundayo oral pill saw 20,000 prescriptions ordered in its first 20 days alone. Of these orders, 80% came from patients new to GLP-1s.

I don’t see this as purely a fad that will fade over the coming year. When you look at the global scale of obesity, it represents massive potential that could support growth for years. This also doesn’t factor in growth in other areas of the healthcare space, with an older demographic to be cared for.

Looking ahead

Compared with SpaceX, Eli Lilly has another kind of advantage: visibility. SpaceX’s future value depends on several ambitious projects working out, from expanding Starlink subscribers to making space launches cheaper. Those opportunities are huge, but they are also harder to predict. Eli Lilly already has a profitable business, regulatory approvals, and measurable demand (like with GLP-1)

Even though some might argue that SpaceX has large potential, the same can also be said of Eli Lilly. Investors may still be underestimating how large the obesity-treatment market becomes. If GLP-1 medicines become a standard part of healthcare, Lilly could see years of revenue growth.

However, I can’t say for certain that Eli Lilly will outperform. For a start, the strong move over the past year means the stock isn’t exactly undervalued. It has a price-to-earnings ratio of 38.81, which is well above the S&P 500 average. It’s also worth mentioning that competitors are also racing into the same market, which could eventually reduce Lilly’s dominance.

But on balance, I think the company’s still worth considering for investors who want to tap into growth stocks outside of the AI and tech space.

Should you invest £5,000 in Eli Lilly right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Eli Lilly made the list?

Jon Smith has no positions in the shares mentioned.

The post I think this S&P 500 stock could easily outperform SpaceX this year appeared first on The Twelfth Magpie.

More reading

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• This FTSE 100 share’s up 15% in just one month — but still looks cheap to me!
• Could Rolls-Royce shares hit £20 – or £10?
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One of the most eye-catching performances in the FTSE 100 over the past month is undoubtedly easyJet (LSE:EZJ). The easyJet share price is up 49% over this period, meaning it’s now only down 6% in the past year.

So what’s the story here and can the rally continue?

Proving resilience

There are two main factors that have helped the stock. The first one was the half-year results that came out in late May. On the face of it, some might have been unimpressed given the headline loss before tax of £552m was an increase from the £394m loss in the prior year. However, there were lots of positives to take from it.

For example, it recorded “a 6% rise in passenger numbers to 42 million and a 2% improvement in load factor to 90%”. More than that, liquidity was strong, with £434m in net cash. The CEO actually said that easyJet has “one of the strongest investment‑grade balance sheets in European aviation“.

This certainly helped to reassure investors at a time when the conflict in the Middle East was causing problems for fuel prices and customer demand.

Yet this flips to our second factor, as in recent weeks there have been signs of a peace deal with the US and Iran, which now looks like it has materialised. The optimism around this has been another factor boosting the company’s stock price.

The direction of travel from here

Clearly, some concerns about higher fuel costs, inflation, and weak consumer spending remain. So if these fears continue to ease, I think the stock has further room to rally.

It’s not like the company is overvalued. In fact, far from it. It has a price-to-earnings ratio of just 7.61. This is over half the FTSE 100 average ratio. When expectations are low, even modest improvements can spark a powerful rebound.

The stock could benefit from other factors, such as from its package holiday arm, easyJet Holidays. This has become an increasingly important growth driver, helping diversify earnings beyond simply selling seats. If demand stays healthy and the airline maintains pricing power, profits could keep surprising.

However, risks remain. We’re certainly not out of the woods yet with the situation in the Middle East. Any slowdown in consumer spending could hit bookings quickly. There is also the risk that the recent rally has simply moved too far, too fast.

Yet on balance, I don’t think this is the end of the runway for the easyJet rally. The stock’s still cheap and isn’t even at the highest level in the past year. With momentum likely coming from lower energy prices as the situation in Iran finally gets sorted out, I think it could keep going.

I bought the stock at the start of the month and feel it’s one investors could consider.

Should you invest £5,000 in easyJet Plc right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if easyJet Plc made the list?

Jon Smith owns shares in easyJet.

The post The easyJet share price is up 49% in a month. What on earth’s going on? appeared first on The Twelfth Magpie.

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