Stocks in flight

“We’re all going on a summer holiday, no more working for a week or two”. Cliff Richard first sang these words in 1963, a time when families would save up all year for an annual getaway.

In the 60s most people would take what we now call a ‘staycation’, as few could afford the luxury of a cruise or flight to a sunny destination.

Nowadays, however, jetting off to somewhere new – a city, beach or jungle – can be done at any time of the year and, thanks to low-cost airlines, doesn’t have to break the bank.

Irish airline Ryanair was one of the first to launch into the low-cost space in 1984, followed almost a decade later by the infamous orange-branded Easyjet.

Together, the airlines have a combined fleet size of more than 700 aircraft, dominating some of the UK’s largest airports, and transport tourists to almost 400 destinations.

We have all, at some point, lined the pockets of Sir Stelios Haji-Ioannou and Michael O’Leary, through ticket sales and in-flight extras, but an investment in one of these businesses could potentially boost the returns of your portfolio, too.

Your capital is at risk.

Ryanair listed on the stock exchange in 1997 and since then its share price has soared more than 1,050%. Easyjet, meanwhile, IPO’d in 2000 and has seen its share price grow 220%.

But while Mr O’Leary’s Irish airline is still on the up, Easyjet’s share price has been suffering. In the past 12 months, it has dropped almost 50% and year to date (June 7), it has fallen 17.4%.

Easyjet is now teetering on the edge of relegation out of the UK100, reserved only for blue chip companies. But for thrill-seeking investors – or even those that just like to place their cash with a stock they think has the potential to offer future value – the orange-airline may well be just what they were looking for.

Beyond the brand, Easyjet has a strong, cash-rich balance sheet that puts it in a good position amid the uncertainty surrounding Brexit, which is having an impact on people from the UK travelling to European destinations.

In September 2018, the airline paid its investors a final dividend of 58.6p, which is no small beer.

Analysts say the company has strong fundamentals and, in spite of the tumbling share price, the outlook for the business remains good. For those that believe it has reached, or at least is close to, the bottom, and have faith in its ability to soar again, Easyjet could give you a short flight to an income without leaving home.

Past performance is not an indication of future results. Your capital is at risk.

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