Could Carnival and IAG shares be the FTSE 100 bargains of the year?

first_img Enter Your Email Address Simply click below to discover how you can take advantage of this. Matthew Dumigan | Friday, 5th June, 2020 | More on: CCL IAG Our 6 ‘Best Buys Now’ Shares Could Carnival and IAG shares be the FTSE 100 bargains of the year? “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. The outbreak of Covid-19 and the resulting sell-off in equities has affected certain stocks substantially more than others. Two companies that have suffered abysmally are Carnival (LSE: CCL) and International Consolidated Airlines Group (LSE: IAG). So much so that Carnival is due to be relegated from the FTSE 100 index later this month.In the depths of the market crash, both saw their share prices tumble by eye-watering amounts (80% and 73% respectively). Since then global stocks have staged a recovery. However, both companies remain a long way from their pre-crash valuations. So, with the potential for some serious value, could Carnival and IAG shares be the bargains of the year?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…CarnivalSeveral factors contribute to Carnival’s share price ruin. The international cruise line operator has suspended all operations as its ships sit idle in harbours around the world. The company, which is already bleeding cash dangerously, has written off a summer return to operations and won’t be back to sail the seas until October at the earliest.That said, I’m encouraged by the fact that the majority of guests affected by schedule changes want to sail in the future, with “fewer than 38% requesting refunds to date”. Moreover, staff layoffs, pay cuts, and a suspension of the dividend should strengthen the group’s liquidity position.Since early April, Carnival shares have rallied by around 116%. It’s worth noting that while that is a staggering number, it is nowhere near enough to allow the company to recover its pre-crash valuation. To achieve that, the Carnival share price will have to extend its rally by around another 400%. Combine this revelation with a price-to-earnings ratio of 3.4 and the potential for significant value becomes increasingly clear. But the future isn’t certain. If holidaymakers fail to make a swift return to cruise ships and passenger numbers remain stubbornly low, Carnival’s long-term survival prospects will inevitably be in doubt.International Consolidated Airlines GroupLikewise, the tumble in IAG’s share price seems relatively straightforward to comprehend. The impact of Covid-19 on the airline industry has been particularly palpable, with entire fleets grounded and many staff furloughed. IAG doesn’t expect passenger demand to recover before 2023 and admits that group-wide restructuring will be necessary for survival.Nevertheless, the company is pinning their hopes on a “meaningful return” to service from July 2020, albeit in a reduced capacity. More importantly though, IAG has taken the necessary steps to bolster its liquidity position and boost cash reserves.Ultimately, I’m sceptical about the doom and gloom that others cast over the long-term future of air travel. I expect it to play an equally important a role in a post-pandemic world as it did previously. As such, depending on how long the global economy takes to recover, IAG shares could prove to be great value for investors who buy today. A P/E ratio of 2.6 backs that thought up nicely.Final verdictUltimately, I don’t see either of these companies going anywhere anytime soon. Provided operations can get up and running swiftly enough, I expect impressive share price gains to reward investors who took the plunge. However, only time will tell whether Carnival and IAG shares turned out to be the bargains of the year, and would-be investors must be prepared to ride this one out over the long term.center_img See all posts by Matthew Dumigan Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Matthew Dumigan owns shares in Carnival and International Airlines Consolidated Group. The Motley Fool UK has recommended Carnival. 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.last_img

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