Might we be reaching the Covid end-game sooner than expected? That should be good news for travel companies like International Consolidated Airlines (LSE: IAG). But investors have not repeated their early 2021 optimism in 2022 so far, with the IAG share price down 2% over 12 months. And over the past two years, we’re still looking at a fall of around 75%.

What’s going to happen in 2022? There are factors pulling in both directions, and today I’m looking at what I see as the key ones.

Firstly, the emergence of a new Covid variant is not good news. But then, emergency travel restrictions in response to Omicron were quickly reversed, as it became clear that the far faster transmission rate meant it was already too late.

The future for leisure aviation should hopefully become a lot clearer in the coming months. Passenger capacity at the end of September had still reached only around 43% of 2019 levels. Full-year results are due on 25 February, and the company expected Q4 to achieve around 60% of 2019 capacity. IAG, though, offered that guidance before the Omicron variant arrived.

IAG share price needs passengers

I also see a downside for improving passenger capacity, and it’s all about the levels that flying will get back to. Will the airlines ever regain their 2019 volumes? That alone is far from certain. And if it happens, how long will it take? I suspect progress on passenger volumes in 2022 has the potential to swing the IAG share price in either direction.

Then there’s the bottom line, and the time for IAG to regain profitability seems key. Q3 brought an operating loss, but there was some light. The company reported positive cash flow for the first time since the start of the pandemic. Liquidity improved too, so the dangers of collapse appear to have been passed.

What valuation now?

That brings me to my final issue, and I think it’s the most important. When I examined Rolls-Royce, I spoke of Benjamin Graham’s famous assertion that in the short run, the market is a voting machine. But in the long run, it’s a weighing machine. I saw a shift happening with Rolls, away from short-term investor sentiment (the voting machine) and towards a fundamental revaluation of the company (the weighing machine).

I see the same happening with International Consolidated Airlines. And the outcome of that will surely be what sets the longer-term course for the IAG share price. So where does that leave me, pondering yet again whether to buy IAG for my ISA?

To buy or not to buy?

I avoid airlines as a rule, due to their highly competitive market and lack of any real differentiation. But at the same time, I’ll buy a stock if I see it as fundamentally undervalued, whatever its sector.

But right now, I really can’t get a grip on IAG’s likely fundamental valuation. I think it will take progress in 2022, coupled with the market’s weighing machine, to sort that out. I’m still watching and waiting.

Alan Oscroft 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.

FTSE 250 incumbent Oxford Biomedica (LSE:OXB) could be primed for growth for many years ahead, in my opinion. Here’s why I would add the shares to my holdings now.

Pharma growth play

Oxford is a biotech firm that specialises in the development of gene-based medicines. It was best known for its drug development platform LentiVector. This platform provides larger pharma firms the opportunity to create new treatments efficiently. Oxford charges fees for the use of its platform and receives royalties from successful drugs created and sold. Recently, Oxford is best known for its successful and lucrative partnership with AstraZeneca to create a Covid-19 vaccine.

As I write, Oxford shares are trading for 876p. At this time last year, the shares were trading for 989p, which is a 11% dip over a 12-month period. The shares have dipped 42% from 1,592p in November to current levels. Over a five-year period, the shares have returned 22%, whereas the FTSE 250 index as a whole has returned 17%.

Why I like Oxford Biomedica

I like the share because Oxford Biomedica’s recent and historic performance has been excellent, although I do understand that is not a guarantee of future performance. I use it as a gauge for determining investment viability. Looking back, I can see revenue and operating profit have increased in 2019 and 2020. With the vaccine rollout set to continue, and other deals in the pipeline, I would estimate 2021 figures could continue its performance growth streak of recent years. More recently, interim results, released in September for the first six months of 2021, were excellent. Revenue alone increased by 139% compared to the same period last year. This was primarily driven by the Covid-19 vaccine and demand levels being high.

I particularly like Oxford Biomedica’s business model which should keep revenue coming in. I mentioned earlier it generates income from platform fees and royalties from sales, which offers it some protection. For example, even if the drug developed by the larger pharma firm using the Oxford platform doesn’t make it to market, Oxford still made money from platform development fees.

Finally, Oxford is investing in its business and in 2020 opened a large new state of the art production site. This has helped it increase its ability to take on new projects and should help it increase performance and in turn, returns.

FTSE 250 stocks have risks

Pharma and drug development is a very competitive market. Although a lucrative market, every firm out there is looking to create, market, and sell the next big drug or treatment. This could affect Oxford’s performance if it were beaten by another firm involved in creating a new cutting-edge treatment. In addition to this, regulatory requirements in pharma are strict and ever changing. This could hinder its projects, as well as sales of any treatments. Royalties could be affected, meaning performance and financials could suffer.

Overall I am bullish on Oxford Biomedica shares right now and would add them to my holdings at current levels. I like its business model, as well as recent and historic performance. Analysts also believe the shares could reach as high as 2,000p! Of course, analysts’ forecasts may not always come to fruition. I believe the FTSE 250 incumbent is primed for long-term growth ahead.

Jabran Khan 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.

Rising inflation, tensions between Ukraine and Russia, and a stubbornly persistent pandemic have combined to put markets in a tizzy right now. Not that I think this should really bother me as I invest for passive income.

Theoretically, holding dividend-bearing stocks should take a lot of worry out of investing. One can simply buy and hold and wait to be paid every three or six months. The money received can help with bills and other living expenses or be reinvested into buying more shares. Naturally, the second course of action is far more Foolish since it allows gains to compound, growing wealth over time.

Top passive income stocks to buy

With this in mind, here are 22 UK stocks I’m interested in to buy and hold for 2022 (and their forecast dividend yields).

• 888 (4.5%)
• Barclays (4.3%)
• Bloomsbury Publishing (2.8%)
• Britvic (3.1%)
• Burberry (2.5%)
• CMC Markets (4.2%)
• Diageo (2%)
• GlaxoSmithKline (3.3%)
• Hipgnosis Songs Fund (4.5%)
• IG Group (5.5%)
• Lok ‘n Store (1.9%)
• Lloyds Bank (4.9%)
• National Grid (4.7%)
• Persimmon (10.1%)
• Primary Health Properties (4.6%)
• Rio Tinto(8.9%)
• Somero Enterprises (6.7%)
• Target Healthcare (6.1%)
• Taylor Wimpey (8.3%)
• Tritax Big Box (3.1%)
• Tritax Eurobox (4.8%)
• Unilever (3.7%)

Rather than attempt to cover every stock, let’s pick out a few highlights that appeal to me most by sector.

Financials

Due to the complexity of their balance sheets, I’m not really a fan of banking stocks. That said, I see the appeal if I were looking for passive income. Many offer decent yields. Moreover, banks could finally see positive momentum if interest rate hikes become more frequent. As such, I’d include perennial retail investor favourite Lloyds Bank in my 22-strong portfolio. Barclays would also be there as it benefits from having a lucrative investment banking arm, in addition to boasting a 4.3% forecast yield.

Online trading platform providers are far more my cup of tea and act as a potentially useful hedge against market volatility. As a holder of IG Group already, I can’t help but include it here. I’d also be partial to taking a stake in CMC Markets, even though management recently cut the payout. While the industry is often targeted by regulators, these firms stand to benefit when times get tough since they generate more commission from increasingly active clients.

Consumer goods

UK investors are spoilt when it comes to options in the consumer goods sector. In addition to offering decent growth, I also think shares from this part of the market are worth holding for the income they throw off.

Unilever is generating a lot of headlines right now thanks to its recent (and rejected) bid to acquire the consumer healthcare arm of GlaxoSmithKline (which is also on my list). Regardless of what happens next, the Marmite-maker has shown itself to be an excellent source of rising dividends. 

Premium drinks owner Diageo was my pick for 2021 and, my goodness, it did well. Like Unilever, it goes in for the simple reason that it’s shown a real commitment to continue hiking dividends over the years.

REITS

In exchange for not paying corporation or capital gains tax, REITS (or real estate investment trusts) are required to pay out 90% of their rental income to investors in the form of dividends. That makes them ideal candidates for a portfolio like this.

I’ll admit to being biased toward firms that specialise in buying/managing portfolios of warehouses and logistics assets since I don’t think there’s much chance of the online shopping trend going into reverse. I’d pick out Tritax Big Box and its Europe-focused equivalent Tritax Eurobox. Dividends at self-storage provider Lok ‘n Store are also growing at a fair clip.

Trusts specialising in owning buildings related to healthcare are another great option. I particularly like Primary Health Properties and care home provider Target Healthcare.

Other

Some of the 22 either don’t fit a particular sector or remain my sole pick from a specific part of the market.

Somero Enterprises would make the list of 22. While its shares could prove to be more volatile thanks to its small-cap status, the company is a leader in supplying equipment to ensure concrete surfaces are flat. Thanks to the US construction boom, it’s been raking in the cash.

No passive income portfolio would be complete without a utility stock. Energy transmission and distribution business National Grid is my preferred choice here. While annual increases aren’t electrifying, the essential nature of what it does should mean that there’s little danger of the company stopping its dividend payments. 

While the mining sector is notoriously cyclical, FTSE 100 member Rio Tinto has its fingers in so many commodity pies that the rewards should outweigh the risks. The company also stands to benefit hugely from the clean energy revolution. 

BAE Systems seems a rather pertinent choice given what’s happening in eastern Europe right now but it would have made the list regardless. While it hasn’t rocketed in value over the years, the consistency shown by the defence behemoth in raising its bi-annual payouts is second to none. 

A few things to consider

Although there’s no perfect number, I believe that 22 stocks should really give me all of the benefits I need from spreading my money around. Fewer than this and I may be taking on too much risk; more and the law of diminishing returns kicks in. 

Second, I’ve intentionally avoided picking only the highest-yielding stocks on the market. This might seem odd if the goal is to generate passive income. However, those appearing to offer the largest payouts are often those most likely to cut them (a high yield can be the result of a plunging share price due to poor trading). It’s far better, at least in my opinion, to buy company stocks where dividends are growing rather than standing still. That’s exactly what’s been happening at many of those listed above.

Third, it’s vital to remember that this isn’t the only strategy available to me. Another option is to buy a few actively-managed income-focused funds. As one might expect, this incurs fees that ultimately eat into eventual returns. The beauty of running a portfolio myself is that, aside from the costs of acquiring the stocks and the ongoing platform charge, there’s nothing else to pay.

No crystal ball

Last, it’s important to acknowledge that some of the 22 dividend stocks I’ve picked out won’t do as well as others in 2022.  The share prices of a few may soar, others may dip. But I’m aware that all stocks come with risks. 

Yet this is missing the point. The objective here is merely to select great dividend stocks. Passive income is the goal here, not capital gains. If I were looking for the latter, very few of the above would probably make it into my portfolio. But that’s a list for another day.

Paul Summers owns shares in Burberry, IG Group and Somero Enterprises. The Motley Fool UK has recommended Barclays, Britvic, Burberry, Diageo, GlaxoSmithKline, Lloyds Banking Group, Primary Health Properties, Somero Enterprises, Inc., Tritax Big Box REIT, and Unilever. 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.

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My Stocks and Shares ISA is a great provision that has been around for many years. It allows me to add £20,000 a year to the account, and then invest the proceeds. These are in a tax-free wrapper, meaning that dividends I receive or capital gains I make from selling shares aren’t taxed. As a result, it makes it a perfect place to house my investments. Here are a few ways I’m trying to make the most out of my ISA.

Mindful of the deadline

The ISA year doesn’t run with the calendar year. The deadline is 5 April. What this means is that my annual £20,000 allowance finishes in April and then renews again for the following year. To get the most out of my Stocks and Shares ISA, I want to try and optimise my cash flow. For example, let’s say that I’ve got £25,000 now that I want to put in my ISA. The smart thing to do would be to put £20,000 in now, and put the extra £5,000 in after the start of the new tax year. If I wait until later in April to add the whole amount, then the extra £5,000 won’t be available to invest in the ISA until 2023.

Even if I don’t have such a large amount of cash ready to go, it still makes sense for me to invest what I can before the April deadline. I don’t know what the future holds for me, so I want to have the full potential to invest the maximum amount later this year.

The second point ties in with the first. I want to try and get invested (within reason) as soon as possible, regardless of the amount. This is because it allows my money to start working hard for me. This might be via buying dividend stocks before the share price goes ex-dividend, or taking advantage of cheap growth stocks. The long-term time horizon for my Stocks and Shares ISA means that over time, my returns should be able to compound.

Other benefits with a Stocks and Shares ISA

The third point is to use the Stocks and Shares ISA to maximise the tax benefits. I have other investment accounts that aren’t linked to my ISA. So when I’m including a stock in my ISA, I want to make the most of the tax saving. Therefore, my focus is to include high-growth stocks that could yield rich rewards further down the line. Then when I come to sell it, the capital gains saving will be considerable.

By comparison, holding defensive stocks or tracker funds in my ISA is fine, but if I’m tight on my available ISA balance then I’d prefer to leave these out.

My final point is to pick stocks with themes that I believe in for the long term. With the Stocks and Shares ISA being a tax wrapper, I don’t really want to be buying and selling on a daily basis. Rather, I’d want to consider themes such as renewable energy, FinTech and technology that I think can offer growth for many years to come.

Jon Smith and The Motley Fool have 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.

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While 2022 has not started well for all stocks, Helium One (LSE: HE1) shares have surged since the year began. They are up 52% so far in January and at one point last week they had gained 94% since the start of the month before losing steam.

Over the past year, the shares show a gain of 54%. But it has been a rollercoaster journey along the way. As the Helium One share price has been falling in recent days, could this be a buying opportunity for my portfolio?

Dramatic price swings

Why has the share price seen such big movements this month? Is it the result of a speculative frenzy in the £70m company, or does it reflect improving business prospects?

The shares had already started climbing quickly when the company made an announcement on 17 January that I think boosted investor sentiment further. It revealed that a study had provided heat-map data across the company’s licensed areas. The results showed anomalies across various parts of the estate, suggesting the potential presence of helium.

A lot of hot air?

That may sound promising. But I am not persuaded that this news improves the investment case for Helium One.

For example, the company reported “multiple surface anomalies identified within all three basins that require follow-up geophysical investigation”. What does that actually tell me as an investor? It gives me no sense of the possible sense or value of the helium. Nor does it mean that Helium One could extract any gas and get it to the market profitably. On top of that, the conclusion is basically that more investigation is needed. That suggests these preliminary results could yet turn to disappointment when more investigation is done.

Commercial model

If more work is done it could also end up leading to a need for new capital. As the company noted last month, it is “well funded for current exploration activities”. I take that to mean that the business that has no commercial revenue is spending money in an exploratory phase. If it finds significant helium and wants to exploit it commercially, it may need to raise more money by diluting existing shareholders.

If the exploration is ultimately fruitless, what will Helium One shareholders actually own? After all, the business case is all about helium. If the company’s plots do not allow for commercial helium extraction and sales, the reason for the existence of Helium One will be called into question. Like most early stage exploration companies, I see this as a speculative business model. An awful lot depends on exploration and feasibility studies that could come to nothing.

Things might turn out better than that. If further studies show the company’s license area is rich in helium it could profitably extract, the business model could turn out to be lucrative. That could support a higher Helium One share price.

My action plan

For now though, I have no intention of buying Helium One for my portfolio. I see it as a speculative exploration company and so far am unpersuaded by its commercial prospects. Lots of gas production companies are already highly profitable and have broadly diversified asset bases. I would consider adding firms like that to my holdings before Helium One, no matter how low its share price falls.

Christopher Ruane 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.

The US S&P 500 index is down by 8% so far this year. The tech-heavy Nasdaq index is down 12%. Popular stocks such as Netflix and Rivian are down by around 35%. Are we about to see another stock market crash?

I don’t know what will happen next. But what I’ve seen so far this year is that corporate earnings seem fairly stable. Although inflation is a concern, I see that as a good reason to invest in stocks — good companies can increase their prices to protect against inflation.

For these reasons, I plan to follow Warren Buffett’s example and stay invested in stocks this year.

Quality vs hype

Buffett was mocked in 2020 and 2021 when shares in his company Berkshire Hathaway lagged badly behind more speculative funds such as Cathie Wood’s Ark Innovation ETF. But the so-called ‘Sage of Omaha’ has been in this business a long time. He sat tight and focused on investing in good quality businesses with durable earnings.

Funnily enough, Berkshire shares have risen by 30% over the last 12 months. The ARK Innovation ETF has fallen by 50% over the same period. Berkshire’s returns are now broadly equal to those of Ark since the start of the pandemic.

It’s a similar story for the best of the big tech companies. For example, Apple and Google are down by around 10% so far this year. But they’re both still trading significantly higher than they were a year ago.

I think the market shakeout we’re seeing now is likely to affect speculative growth stocks more than more mature, profitable businesses. Many of the falling stocks were priced at sky-high valuations six months ago, even though some of them weren’t making any money.

After such rapid gains, I think it’s natural to expect a correction. In my view, that’s what we’re seeing now.

What I’m doing today

One mistake I made in the 2020 crash was to start buying too soon. Stocks continued to fall for longer than I expected. I don’t think the current market slump is over yet. Some of the UK shares I own have hardly moved at all.

I don’t know what will happen next, but I don’t want to be a seller if prices keep falling. What I’m doing now is reviewing each of the shares in my portfolio. I want to make sure I’m happy with the fundamentals and the outlook for each business.

If I’m comfortable with the situation, then I’m not going to worry about short-term share price movements. In my experience, good businesses that produce reliable profits usually find the right level. I plan to use any short-term share price falls as a buying opportunity, rather than a reason to sell.

Buffett says that when he’s able to buy shares in good businesses at a reasonable price, then his favourite holding period is “forever”. That’s my aim too.

I’ll only sell if I change my view on an investment. Right now, I’m sitting tight.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet (A shares) and Apple. 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.

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