This FTSE Airline Could Easily Land In Any Long-Term Portfolio |

In the preliminary months of the COVID-19 pandemic, most buyers averted travel shares, particularly airways. Yet, as investor sentiment started bettering, so did the share costs of those companies.

For occasion, year-to-date (YTD), the and the indices are up greater than 17% and 36%, respectively. Since the beginning of the yr, shares of American Airlines (NASDAQ:), Delta Air Lines (NYSE:) and United Airlines (NASDAQ:) have returned greater than 61%, 25% and 44%, respectively.

On the opposite aspect of the Atlantic, airways have additionally been among the many most traded shares on the and indices. Today, we take a more in-depth have a look at FTSE 250 member Wizz Air Holdings (LON:) (OTC:). In the previous 12 months, WIZZ inventory is up 141% and YTD returns are about 16%. On Mar. 18, the shares closed at 5,100p ($16.75 for U.S.-based inventory).

A Budget Airline Serving Niche Markets

Hungary-based Wizz Air started operations in 2003 as a low-cost airline. Since then, it has concentrated on the relatively under-served central and eastern European markets.

Wizz Air flies to numerous cities in Europe, as well as some points in North Africa and the Middle East. Since the first flight in 2004, the airline has flown more than 200 million passengers across 44 countries.

Its low-cost no-frills system is built around direct booking through the website or app and paying for the extras as might be needed.

Management strives to develop a sustainable travel company that looks for ways to decrease its environmental footprint. This green element appeals to investors, who pay attention to “Environmental, Social and Corporate Governance” (ESG) factors.

When we compare the annual for 2020 and 2019, we see Wizz Air increased profits from £123 million (or $171.3 million) to £281 million (or $391.3 million). The company’s annual report for 2021, which covers operations up to March 2021 will be released in the coming weeks. Understandably, the results from 2020 to 2021 will not be strong as it racks up significant losses for the fiscal year.

Bottom Line

Over the past several months, airline stocks have found a receptive audience, as evidenced by the increase in their share prices. “Got vaccinated will travel” is likely to become the buzz words in the coming months, with travel companies likely to see robust pent-up demand once travel restrictions are lifted in many parts of the globe.

Yet, markets are forward-looking. Therefore, we would not be buying Wizz Air or other airline shares at these current levels. For WIZZ stock, a decline toward 4,750p or even below would improve the margin of safety for buy-and-hold investors. Its forward P/E, P/S and P/B ratios of 217.39, 4.87 and 5.36, respectively, point to a frothy valuation level. Recently, the shares have been downgraded to “Hold” by HSBC (NYSE:), with a value goal of 4,400p.

But, as soon as we go previous the pandemic volatility, we’re bullish on the corporate’s long-term prospects. With a market capitalization of £4.Four billion (or $6.1 billion), Wizz Air can nonetheless develop significantly. Once the pandemic is behind us, the corporate could possibly be a takeover candidate, a possible improvement that will create important shareholder worth. Therefore, declines of round 5%-7% would imply alternative to purchase into the shares of this finances airline that has carved itself a distinct segment market in Europe.

On a ultimate be aware, buyers who’re keen on WIZZ inventory however don’t need to commit capital to a single firm may think about shopping for an exchange-traded fund (ETF) that holds the shares. Examples embrace:

  • Schwab International Small-Cap Equity ETF™ (NYSE:): up 7.7% YTD;
  • SPDR Portfolio Europe (NYSE:): up 5.1% YTD;
  • U.S. Global Jets ETF (NYSE:): up 28.4% YTD.

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