These are 3 of my worst-performing investments in 2021. Here’s what I’d do now
Last year at this time, it appeared that the pandemic would soon be over. Beaten down stocks had started to inch up in late 2020. And many of them did indeed continue to recover through 2021. But not all of them saw the same boost. Some sectors continued to be mired in uncertainty, as a result some stocks’ prices remained weak.
Perhaps the best example of this is the travel segment, that includes a FTSE 100 stock like International Consolidated Airlines Group and FTSE 250 stocks like easyJet and National Express among plenty of others. I am talking about these right now, because they are part of my investment portfolio. And I cannot ignore the fact that all three of them have underperformed compared to my other investments this year.
Why I am not worried
I am not particularly perturbed about this. 2021 has continued to be a hard year for these stocks after a disastrous 2020. Restrictions on travel have significantly reduced their capacity to generate revenues (especially the air carriers). Even for a coach operator like National Express, which have seen some degree of financial turnaround, uncertainty is still a big drag on the share price. Its recent merger deal with Stagecoach, could hurt its share price, because there is an element of uncertainty about a combined future.
Another reason why I am holding on to these stock for now is, that I do expect recovery over time in their operations. I bought them for the long haul, so if in one year they fall by, say, 20% or rise by that much, it makes no difference to me in actual terms. As long as they are able to pick up as the pandemic moderates further, I am content. The real challenge, in my view, would be if their performances continued to falter even after the pandemic was over.
What could go wrong
I cannot say that will happen, of course. Right now I cannot even say when the pandemic will be over. At the same time, I think 2022 could be a far better year for these stocks than 2021. Slowly but surely, travel is opening up again. IAG, for instance, is restarting short-haul flights from March onwards. While it will start these operations with three aircrafts, by May these are expected to rise to 18.
Would I invest in these stocks now?
If I had not already bought these three stocks, I would seriously consider buying them now. A lot of other recovery stocks look quite expensive to me today. And these are among the remaining ones that stand to gain as sentiment picks up. However, I am not adding to my positions in these stocks, because I do not want to be overexposed to what I see as high-risk investments.
The post These are 3 of my worst-performing investments in 2021. Here’s what I’d do now appeared first on The Motley Fool UK.
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Manika Premsingh owns National Express Group, easyJet and IAG. 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.