What’s behind this rise. And, importantly, can it continue?

Why the ABDX share price is flying

York-based Abingdon Health describes itself as a “world-leading developer and manufacturer of high-quality rapid lateral flows tests“. The reason why its share price has been soaring in recent days is down to the launch of the BioSURE Covid-19 IgG Antibody Self Test. BioSURE — Abingdon’s partner — already produces rapid tests for HIV. 

This test itself uses a minute amount of blood from a finger and gives results in around 20 minutes. Essentially, it allows people to monitor their own antibody status in the comfort of their home either before getting jabbed, after getting jabbed or post-infection. Based on the thickness of the line on the testing strip, people can quickly understand whether they are protected against Covid-19 or not. 

Such a test is patently useful as economies around the world continue to recover from multiple lockdowns and lost activity. So, could this just be the start of a sustained rise in the ABDX share price?

Revenue could soar

There are certainly reasons to be bullish on the outlook. Production of the test is now in full flow at the company’s facilities in York and Doncaster. Importantly, Abingdon is also the exclusive worldwide manufacturer of the test.

There are other positives. I’m not an expert on pricing. However, £32.95 (the cost of the test) doesn’t seem excessive. Moreover, it’s likely that demand for Abingdon’s test will exist for some time as more governments shift to the idea we all need to manage rather than defeat Covid-19. It may become especially useful if booster vaccinations are deemed necessary.

Another thing worth knowing is that the BioSURE Covid-19 IgG Antibody Self Test is just one of a number of Covid-19-related products being manufactured by the firm. Assuming others make the grade, revenue growth at Abingdon could conceivably soar.  

Buyer beware

As wonderful as the performance of the ABDX share price has been, it goes without saying that there are one or two things I need to remember before investing here. 

The first is that small-cap stocks, especially those in this area, are prone to ‘pop and drop’ behaviour. A quick peek at the share price graph of diagnostic firm Novacyt bears this out.

Will Abingdon follow a similar trajectory? Well, no share price rises in a straight line. It’s inevitable some traders will want to bank profits at some point. Whether the stock continues to multi-bag before then is, naturally, very hard to say.

A related issue for investors is that Abingdon has a very small ‘free float’. Just 25% of its stock is traded on the market. That may help explain why the share has done so well recently. It only takes a few trades to really move the needle. Since the ABDX share price has the potential to also move violently downwards, I think there’s one thing I can comfortably predict: volatility. 

Overall, I rate the shares as a (very) cautious buy for my portfolio. Nevertheless, I’d only ever play with money I could afford to lose.

The post Here’s why penny stock Abingdon Health (ABDX) has rocketed 140% appeared first on The Twelfth Magpie.

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Paul Summers 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.

Dire numbers

Today’s interim results from On the Beach (LSE: OTB) have been greeted with a shrug of the shoulders from the market. Considering the ongoing uncertainty regarding the pandemic, that’s to be expected. Yesterday’s news that the final stage in Boris Johnson’s roadmap would be delayed was always likely to make investors jittery over what the next few months could bring for any company in this space.

Predictably, OTB’s actual numbers weren’t great either. Despite knowing that international leisure travel would technically receive the green light on 17 May, travellers have been behaving cautiously. This, combined with “a significant number of cancellations” due to the extended lockdown, had a “material impact” on trading. 

All told, revenue in H1 tumbled 79% to £4.4m over the six months to the end of March. An adjusted pre-tax loss of £9.5m was also reported.

None of this should come as a surprise to holders. After all, the number of European destinations prepared/permitted to welcome UK tourists back seems to change on a weekly basis. Factor in the costs of getting pre-flight coronavirus tests and potential disruption caused by local curfews and it’s understandable that people are holding back.

So why is this the best British stock to buy?

But there are a few reasons why I think OTB is the best British stock buy in this sector. First, there’s its financial position. At the end of March, the company had £30m in its coffers (and an undrawn revolving credit facility of £75m). Importantly, this excluded cash received from customers. This is ring-fenced in a separate account — an arrangement likely to be well-received by both investors and holidaymakers. If confidence is to return, transparency is key.

Second, last month’s decision to stop selling holidays set to depart before the beginning of September was another prudent move, especially as the company believed any upside from bookings would be “marginal” and offset by disruption caused by cancellations. Again, by focusing on helping those with existing bookings, OTB is likely to win loyalty from customers. I suspect this will serve it well once restrictions are completely lifted.

Third, there are already signs that 2022 could be a great year for the company (assuming things do return to normal, which isn’t guaranteed). Sure, the number of bookings remains stubbornly low. However, OTB did say they were “significantly ahead of normal trading patterns”, albeit partly caused by the early release of flights by airlines.

Lastly, I remain a big fan of the company’s flexible business model. Its relatively small amount of cash burn and online-only presence allows OTB to remain nimble, even in troubled times. 

Positive outlook

Like many in the travel sector, OTB remains in a sticky patch. But despite deciding against issuing guidance for its full-year, CEO Simon Cooper remains bullish on OTB’s prospects. Today, he said the steps taken to respond to the Covid-19 fallout should help to position it “very strongly for successful and sustained growth.”

Based on my analysis, I can’t argue with that.

The post 1 British stock to buy for the travel recovery appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended On The Beach. 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.

Activist Investment

The main reason behind the partial recovery for GlaxoSmithKline shares is that activist hedge fund Elliott Management has opened an undisclosed stake in the firm. An activist hedge fund is an investing style that seeks to put pressure on a firm’s management to increase the value of the company, therefore increasing the value of their investment.

GlaxoSmithKline is a prime target for such investment. It has a well-established name, business plan, and manufacturing network. However, its share price has been prone to large fluctuations as the firm has struggled with debt problems for several years, with liabilities largely outweighing receivables.  I believe Elliott could really capitalise on helping Glaxo to streamline its current assets, adding big value for investors, and hopefully stabilising the share price for the future.

Though the exact figure for the investment is undisclosed, it’s estimated to be in the billions. An investment of this magnitude signifies Elliott believes it can make some serious money with Glaxo. And the only way it will do this is if it can make the share price rise, which is good news for investors. 

Bear case for GlaxoSmithKline shares

2020 was a year defined by the pandemic. Many pharmaceutical shares skyrocketed as a product of vaccination development. However, GlaxoSmithKline confirmed in February 2021 that it would not be continuing its own Covid-19 vaccination development. The firm has announced it will assist in the manufacturing of 60m Novovax vaccines. Yet GlaxoSmithKline shares are still trading below their March 2020 low. This is discouraging considering the recoveries that many other pharma stocks like Moderna and AstraZeneca have made since their March 2020 lows. 

Another consideration for investors is how the company’s plan to split may affect dividend payments. It’s separating its BioPharma and Consumer Healthcare businesses in 2022. GlaxoSmithKline currently pays a dividend of 5.9%, double the FTSE 100 average. However, it has signaled in the past that the combined yield from the two businesses may not add up to the current yield. This reduces GlaxoSmithKline’s viability as a solid income share.

What’s next for GSK

An activist hedge fund like Elliott seems to have been a lifeline for GlaxoSmithKline in recent weeks. It could really galvanise Glaxo to drive faster growth. However, the lack of an owned coronavirus vaccine and the split of the firm into two entities is unlikely to help share prices any time soon.

Yet I’m optimistic for the future. I think the current GSK share price does represent a great opportunity to get a hold of cheap shares. I think Elliott’s involvement could really shake things up and push share prices higher in the future. All risks considered, I like the look of this cheap FTSE 100 share for my portfolio.

The post Should I buy GlaxoSmithKline shares at the current price? appeared first on The Twelfth Magpie.

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Dylan Hood owns shares of AstraZeneca. The Motley Fool UK has recommended GlaxoSmithKline and Moderna Inc. 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.

Peaking at just under £30 on September 18, 2018, the Accesso Technology (LSE: ACSO) share price went on to see a steady decline. This was the case until late 2020, when things started to pick up for the AIM-listed company. In the past six months, the share price has increased over 180% and year-to-date prices are up 250%! A year ago the price was almost 223p. It closed Tuesday at 720p. Let’s take a closer look at why.

What is Accesso Technology?

Accesso is a virtual queuing, ticketing, and distribution company. Its solutions operate in theme parks, water parks, cruise lines, museums, and various other attractions. Accesso eliminates the hassle of queuing, instead you get a token that tells you when it’s your turn. Accesso functions at over 1,000 venues in over 30 countries. This is a huge reach to the guest experience and tickets & distributions markets, which are valued at $1.5bn and $1.9bn respectively.

Bull case for Accesso Technology share price

The recent increase in share price can be largely attributed to the recent full-year results issued by Accesso. Revenues of $56.1m exceeded revised projections for 2020 by 3%. This increase in revenue was in the face of multiple worldwide lockdowns. This gives me huge confidence in the company’s direction for 2021.

The firm also announced a stronger liquidity position, with a rise in net cash to $29.7m. This was also backed up by a new three-year debt facility, which will provide $18m of liquidity. This gives the company a strong cash base moving forward.

Most importantly, as lockdown restrictions are lifted, people will want to visit theme parks again. The guest experience industry will thrive as people are allowed to visit their favourite attractions freely again. Accesso’s business model is built on this freedom and will profit directly from this reopening.

Bear case for the share price

The fact that the Accesso Technology share price had been falling since 2018 — before the pandemic shut down the attractions industry — does worry me.

The company was a classic example of an overinflated growth share, I feel. It offered a new, exciting technology that investors flocked to, inflating the price/earnings ratio to 70 at one point. This came at the cost of neglecting some of the shaky fundamentals that began to present themselves in the 2018 annual report. By 2019, cash issues led to the Accesso bubble bursting, sending share prices tumbling. If shaky management happened once, who’s to say it won’t happen again?

There’s also the problem that the pandemic still exists. Although vaccines are being rolled out, there are some concerns about the AstraZeneca vaccine’s safety that have impacted the rollout in some countries. And distribution globally for all vaccines remains patchy. This could halt the opening of the public attractions that drive Accesso’s business.

My Verdict

But I believe the Accesso Technology share price will continue to rise throughout 2021 as much of its business reopens, even if not as fast as it has done. The firm has also strengthened its balance sheet throughout 2020, learning from previous mistakes. There are still risks to consider, but I think the worst is behind this company. Therefore, I could see this stock being a solid addition to my portfolio.

The post Will the Accesso Technology share price keep climbing? appeared first on The Twelfth Magpie.

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Dylan Hood owns AstraZeneca shares. The Motley Fool UK has recommended Accesso Technology. 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.

FTSE 100 global play

If I’m going to avoid the nastiness of a no-deal exit, it makes sense to buy shares in global players. Top-tier drinks behemoth Diageo (LSE: DGE) is surely a great example. It sells its premium spirits in 180 countries around the world.

This geographical diversity is important since a disorderly Brexit could see the value of sterling fall once again, helping exporters. Indeed, it’s one of the reasons why the FTSE 100 index has done so well recently.

But Diageo has other attractions. In my book, it’s also one of the best ways to play the bounce in equities once the coronavirus storm has passed. 

Like many stocks, Diageo has enjoyed a nice recovery over the last few weeks following news of several vaccines proving effective in fighting the coronavirus. Since the beginning of November, shares are up 17%. This suggests investors are confident that bars, restaurants and sporting venues will be able to completely open their doors at some point in 2021, thus helping revenue and profits to recover. As such, the £68bn cap is still a buy, in my opinion.

Back in fashion

Despite the uncertainty surrounding Brexit, I’ve been slowly accumulating a position in luxury brand Burberry (LSE: BRBY) throughout 2020. Like Diageo, the FTSE 100 stock sticks out as a great buy given that a huge proportion of its earnings come from Asia and its increasingly affluent middle class. 

Burberry is, of course, a highly desirable brand. As I see it, the demand for luxury goods will continue to grow regardless of the outcome of the current negotiations. Those who can afford to buy Burberry’s products will do so. Never underestimate our desire to stand out from the crowd!

Burberry’s shares are up 16% in the last month. Even so, I still believe the company is undervalued, at least relative to other global luxury brands. Further gains could be on the cards when it next reports to investors in January.

Copper load of this

A final FTSE 100 stock I’d consider as a way of navigating a no-deal scenario would be miner Antofagasta (LSE: ANTO). Having extracted copper from its operations in Chile, the company then sends it to buyers around the world. Importantly, Anto generates 100% of revenues from outside the UK. In fact, most of its copper goes to Asia. 

Naturally, any investment in a company exposed to commodity prices — something it has no control over — involves risk. Even so, I think the outlook for companies like Antofagasta is very encouraging. 

Thanks to the excitement surrounding the EV revolution and clean energy in general, the copper price has been in fine form recently. Accordingly, Anto’s share price has also soared 24% in just one month!

Sure, there will be lots of ups and downs ahead. Nevertheless, I believe the miner could be another way of reducing Brexit-related portfolio exposure. Deal or no deal, Antofagasta could prove a cunning buy in years to come.

The post Scared of a no-deal Brexit? Here are 3 of the best FTSE 100 shares I’d buy today appeared first on The Twelfth Magpie.

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Paul Summers owns shares of Burberry. The Motley Fool UK has recommended Burberry and Diageo. 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.

Is my long-held suspicion that the shares are overbought finally ringing true, or is this a mere short-term blip?

Ocado sales soar

This morning’s numbers relate to Ocado’s retail arm — the joint venture it formed with battered former FTSE 100 member Marks & Spencer back in February 2019.

Thanks in part to another lockdown, retail revenue soared 35% over the 13 weeks to 29 November to just under £580m. According to the company, this compares favourably to the normal peaks and troughs experienced before the coronavirus arrived. It also suggests customers have been receptive to the firm’s switch in trading partners, to M&S from Waitrose in September.

Ocado received an average of 360,000 order per week over the period — up 3% from Q4 2019. Despite the additional demand, it was able to achieve “high rates of on-time customer delivery and low rates of substitutions,” according to Retail CEO Melanie Smith. The average order size was £133 — evidence, Ocado believes, that shoppers’ behaviour was continuing to “normalise.“

Priced in?

It seems fair to say Ocado shares have been one of the better FTSE 100 buys in 2020. Those placing the stock in their shopping basket at the beginning of January would be sitting on a gain of around 75%. That’s after taking today’s fall into account! The question is, how much of this good news is now priced in?

Based on this morning’s reaction. I’d say quite a lot, especially as the company raised earnings guidance again today. It now expects full-year earnings to be “over £70m” compared to its previous prediction of over £60m. And yet traders weren’t impressed!

Part of this may be explained by the fuzzy outlook. Within today’s statement, Ocado said sales and earnings growth in the next financial year will depend on how quickly trading normalises. It’s also dependent on when three new warehouses become operational. These are expected to add 40% more capacity to the business.

Market minnow

But is this reaction really that surprising? After all, Ocado is still trading at a loss, due to the huge investment it’s needed to make over the years. As impressive as its operations are, the FTSE 100 company is already valued at over £17bn. That’s the sort of staggering valuation we’d expect from flash (overhyped) US tech stock. Sure, Ocado might utilise market-leading software, but no share is worth buying at any price. 

On top of this, it’s worth remembering Ocado doesn’t operate in a vacuum and the grocery market remains as cut-throat as ever. Depending on how the UK economy fares in 2021, it’s possible more people will switch away from M&S to cheaper options out of necessity.  

It’s not as if Ocado has a commanding presence either. In November, it had just a 1.7% share of the UK market, according to Kantar. FTSE 100 peer Tesco, on the other hand, had 27%. Its valuation is £22bn — only £5bn more than Ocado. 

Considering the above, I’m still giving Ocado shares a wide berth as an investor. For me, there are far better opportunities elsewhere in the market. The bubble may finally be bursting.

The post Ocado shares are falling today. Is this FTSE 100 firm’s bubble finally bursting? appeared first on The Twelfth Magpie.

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Paul Summers 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.

Is this now a home run for investors? I’m not so sure.

Priced in? 

Having been so battered in 2020, the tilt to value stocks — particularly those operating in the travel and leisure space — makes sense. The question, however, is whether the recent good news is now priced-in. 

I think it might be. Even if air travel does rebound in 2021 as the market expects it to, easyJet will still face the same level of competition for passengers it did before the coronavirus reared its ugly head.

In the meantime, there’s a truckload of debt on its balance sheet to sort out. Tellingly, directors aren’t among those buying the shares either. This suggests they aren’t wholly confident about recent gains sticking. 

There’s also Brexit to think about. As I type, Boris Johnson is on his way to Brussels in a last-ditch attempt to strike a deal with his EU counterparts. The fact that negotiations are even still continuing is arguably encouraging, but I certainly wouldn’t want to gamble my money on a positive outcome. Even if an agreement is reached, only the most optimistic of investors would presume there won’t be further hurdles ahead.

All told, I think the easyJet share price could still see some volatility in the near term. That’s why, right now, I’m buying the shares of a different FTSE 250 company: polymer provider Victrex (LSE: VCT)

“Significant headwinds” 

Like the Luton-based airline, the coronavirus hasn’t been kind to Victrex. Today’s full-year numbers give some indication of the damage done.      

Sales volumes and revenue declined 7% and 10% respectively over the 12 months to the end of September thanks to “significant Covid-19 headwinds in H2″ having a “material impact” on the business.

Unsurprisingly, this has filtered down to Victrex’s bottom line. Reported pre-tax profit tumbled to £63.5m — 39% lower than the previous year.

It doesn’t look like trading will bounce back soon either. Today, Victrex said that “overall performance remains subdued” thanks to end-markets such as Aerospace and Energy continuing to be weak.

Buying opportunity

Based on today’s muted reaction, it would seem that none of this is a surprise to the market.

In contrast to the easyJet share price, Victrex’s valuation was down slightly in early trading. This suggests to me that now might be time to load up. But I think there are other reasons to be optimistic.

For one, its finances look strong enough to withstand this problematic period. The FTSE 250 firm had £73.1m in cash at the end of the last financial year.

The reinstatement of dividends — a final payout of 46.14p per share will now be paid — is another positive. I doubt management would be making this decision unless it was confident about trading picking up in 2021.

Third, Victrex continues to invest in growth opportunities, including a new manufacturing facility in China. On top of this, you have the traditional hallmarks of a quality company: high margins, high returns on capital employed, and a market-leading position. 

The easyJet share price has done well over recent weeks but, like Terry Smith, I’m more interested in what happens to valuations over decades. Victrex remains a better buy-and-hold pick for me.

The post Forget the easyJet share price. I’m buying this FTSE 250 stock for the next bull market! appeared first on The Twelfth Magpie.

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Paul Summers owns shares of Victrex. The Motley Fool UK has recommended Victrex. 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.

The share rally’s biggest risers seem to have been the companies the suffered the heaviest falls since the pandemic began in earnest, back in March. This includes the travel, hospitality and leisure industries, along with the banking sector. In some cases, share prices have now more than doubled from their spring lows.

One result of this stock market rally is that there are now considerably fewer attractive investment opportunities available. Where previously, share prices looked oversold and cheap, many now look more fairly valued. However, I think there are still noticeable areas of the market where value does exist to help me build a portfolio poised for growth.

In my opinion, some of the most attractive investment opportunities right now are the shares that didn’t sell off wildly during the depths of the pandemic. Likewise, they are the shares that didn’t get swept up in the recent rally. Instead, I believe they are the companies that looked cheap before the pandemic and remained so during it.

Overlooked by the stock market rally

I’m talking about the likes of Yellow Cake. The uranium investment company that is valued at a 23% discount to its net assets. This savvy company has spent the last few months selling its uranium holdings to fund a buy-back of its own shares. That way it gains exposure to the uranium price at hefty discount. Yellow Cake looks even more attractive to me after the announcement that Rolls-Royce plans to build up to 16 small modular reactors (mini-nuclear plants) in the UK. This looks set to revitalise the nuclear sector in both the UK and beyond.

Ferrexpo is another share that I like. As well as coming with an 8% dividend, it’s also cheap, trading at just three times last year’s earnings. I’m actually surprised the shares have not been caught up in the stock market rally, since demand for its iron pellets should benefit significantly from a vaccine-enabled return to worldwide economic growth.

Vaccine improves investment prospects

Shares in Finsbury Food Group are also still looking good value to me. The shares are valued at eight times pre-Covid (FY 2019) earnings. A return to normality would surely put the bread and cake manufacturer back on its growth trajectory. Meanwhile, I think both Aviva and Tesco look attractive. Aviva is trading at a 33% discount to its net asset value. Speculation of asset disposals only reinforces the value on offer. Owing to its own disposals, Tesco appears to be on the verge of announcing a huge 20% special dividend payment.

Despite the pandemic, all of these companies are currently performing well. In fact, I think that’s precisely why they missed out on the stock market rally. Investors were attracted to the companies that had been struggling the most, the ones that really needed some positive vaccine news. I believe we now have a situation where the companies that have actually been managing well are now looking under bought and very attractive. They are the shares that I would buy now.

The post Stock market rally: 5 shares that still look cheap to me appeared first on The Twelfth Magpie.

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• How much is needed in an ISA to unlock £1,220 of passive income a year?
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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Thomas owns shares in Finsbury Food Group and Aviva. The Motley Fool UK has recommended Tesco. 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.

Well, let’s start by looking at a couple of reasons to be optimistic that people will flood back to the silver screen. 

Cineworld shares: reasons to be cheerful

First, there’s the novelty effect. Convenient as streaming services such as Netflix and Amazon Prime are, holders of Cineworld shares will surely argue that there’s nothing quite like watching the latest blockbuster in all its visual and auditory glory. Having endured two lockdowns, a trip to the cinema will almost feel like a new experience, in the same way as taking a holiday abroad might.

Second, we know there’s a truckload of blockbusters on the way. New Bond and Batman films, the Top Gun sequel, Wonder Woman — the list goes on and on. And, make no mistake, film studios will be chomping at the bit to ‘green light’ productions once it’s safe to do so. 

Based on the above, demand for cinema tickets looks set to increase. However, we need to put things in perspective.

Awful investment

For one, we’re not out of the woods yet. Distributing the vaccine will take time and patience is not something many in the market are blessed with. It is, therefore, quite possible that Cineworld shares will resume their downward descent as people get bored, bank profits and seek out their next target. 

The number of traders still betting against Cineworld also needs highlighting. Even after this week’s stonking price action, the company remains the most shorted stock on the London Stock Exchange. One reason for this enduring pessimism is the shocking state of its finances. 

To be clear, Cineworld’s problems extend far beyond simply selling popcorn and getting ‘bums back on seats’. With a huge debt burden, it seems likely it will seek more cash from its owners at some point. To paraphrase top fund manager Terry Smith, I prefer companies that pay me rather than the other way around.

And that jump in the share price? Go back to the beginning of 2020 and Cineworld shares were trading at 220p a pop. Regardless of this week’s move, it’s still been a staggeringly bad investment for loyal holders. 

Steering clear

Now, I don’t doubt it’s still possible to make money from Cineworld shares over the next few months. In the absence of a crystal ball however, this will surely depend far more on luck than anything else. Right now, Cineworld’s a gamble, a ‘punt’. This isn’t the Foolish way.

Nope, we see investing as a long-term pursuit. We’re focused on buying great companies at decent prices and holding them ‘forever’. Even when they get in a sticky spot — and all businesses will — we’re confident they’ve the products or services, growth opportunities and financial firepower to recover.

As someone still struggling to put Cineworld in this camp, I’d encourage prospective buyers to look beyond the share price. Instead, look at the underlying business. Is this something that’ll thrive for years to come? I still need convincing.

The post Cineworld shares have soared. Have I missed the investing opportunity of a lifetime? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
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This airline stock just soared 38%

After Rolls-Royce, IAG (LSE: IAG) was the largest riser in the FTSE 100 in Monday’s trading. Of course, the travel stock has been heavily affected by the pandemic, and its recent third-quarter trading update saw the company making an operating loss of €3.2bn. The recent imposition of further lockdowns in the UK and Europe has also been disastrous for the travel industry. This follows an incredibly hard summer brought about by the lack of tourism. As such, the British Airways owner has already had to raise £2.5bn in a rights issue to stay afloat. This resulted in share price lows of 66p (down from 260p at the start of the year).

Nevertheless, after the recent news of a potential effective vaccine, there is certainly far more optimism surrounding this stock. For example, it now seems possible a third wave can be avoided, and this could allow the airline owner to return to profitability next year. 

As a result, this particular travel stock now looks to me to be a far more appealing buy than it did a month ago. Although problems do still abound within the travel industry, and there’s uncertainty over when this potential vaccine would be available, I’d now be more tempted to buy IAG shares at some point. Even so, I do still believe that the market has reacted slightly too positively to the vaccine news. On the back of its 40% rise, I’d therefore expect a short-term decline and would wait a little longer before buying.  

This travel stock is a quality operator

National Express (LSE: NEX) is the other travel stock that particularly interests me. While the coach operator has had a dismal 2020, this follows consecutive years of growth, leading to good consumer relationships and strong liquidity. Contracts with local authorities have also allowed the company to offset some of its losses. As such, the recent vaccine news looks capable of propelling National Express shares back towards its former glory, as already shown by a 26% increase yesterday.   

Of course, similarly to IAG, the most recent lockdown will have had a severe effect on the coach operator. I’d therefore continue expecting short-term pain for the FTSE 250 stock. But in the long term, I remain optimistic, especially in the light of vaccine news. As such, I’d buy this stock. Once again, I wouldn’t rush into buying, but would wait, in expectation of the market correcting itself over the next few days.

The post The FTSE 100 soars 5% on vaccine hopes. Is it time to buy these travel stocks? appeared first on The Twelfth Magpie.

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Stuart Blair owns shares in National Express. 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.