One big investment dilemma has plagued me constantly this year. Should I ride the crypto wave or focus on what I think is the more stable and reliable stock market for my investments? My crypto journey has been as volatile and action-packed as a Marvel film. But I prefer DC comics’ more toned-down, extended-release vibe when it comes to my investment portfolio. Wouldn’t it be great if UK shares offered the returns of crypto while retaining their relative sense of calm?

Well, one UK share has managed to outperform Bitcoin this year. And the company has strong financials to back up its incredible 187% market returns in the last 12 months. Here are reasons why I’m watching this FTSE 250 share closely.

Time for luxury

A £1,000 investment in Watches of Switzerland Group (LSE: WOSG) shares in January 2021 would be worth £2,870 today. And although I regret missing out, I still think the business has growth potential heading into 2022. The luxury watch retailer’s great run in the market is backed up by a unique market condition and robust financials.

Over the last decade, I’ve noticed a switch in consumer mentality. Barring the extended Covid lockdown period, luxury goods have been in demand. The term ‘aspirational consumer’ encapsulates the way people look at luxury goods as status symbols. Research shows that this has been strengthened with the rise of social media, which has exposed a luxury lifestyle to more of us.

Luxury brands are now being marketed in emerging economies with a lot of success. The surge in popularity of premium goods in China and the Middle East has brought in a wider consumer base, which brands are capitalising on. This offers brands like Watches of Switzerland a new avenue for expansion.  And some analysts expect the segment to double its market share by 2030. However, WOSG is currently focused on markets in the UK and the US, where it has been very successful recently. Sales in the UK grew 43% to £418.6m in the first-half of this year. 

But is this enough to justify this UK share outstripping Bitcoin’s 147% growth in 2021?

Strong financials

The company recently released a half-yearly (H1) update for the 26 weeks to 31 October and it was a positive one for investors. Group revenue went up 44.6% to £586.2m compared to the same period last year. This resulted in statutory operating profit growth of 58.6% to £72.3m.

The luxury watches and jewellery retailer’s expansion plans in the US are gathering steam too. It recently purchased five stores in four states, which is expected to bring in around $100m in revenue. The company is focusing on luxury, monobrand boutiques in targeted shopping districts. The success in America has buoyed revenue targets this year to £1.15bn-£1.2bn (previous guidance was £1.05bn-£1.1bn).

But the stock does come with some concerns. According to a Bain luxury market report, watches were the worst hit luxury accessory category last year. That’s concerning to me as a potential investor in this UK share. And given growth this year, WOSG shares are currently trading at a forward profit-to-earnings ratio of 67 times, making it very overvalued at the moment.

But the sector looks healthy overall. This UK share is pricey at the moment. But I’m watching it closely to capitalise on any dips in price as I think it offers growth potential over the long term. 

Suraj Radhakrishnan 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.

It’s been quite the year for AMC Entertainment (NYSE:AMC). Exactly a year ago, the share price was trading around $3, having seen diminishing returns over several years as the movie theater operator struggled. This all changed in January, when retail traders and online chat rooms banded together to propel the AMC share price higher. After a volatile year with a high of over $62, the bubble appears to be bursting. So is this the end for the meme stock?

Reasons for the slump

Yesterday, the AMC share price dropped 15%, to close the day at $23.24. As mentioned above, this still represents an eight times return from a year ago. However, the stock has halved in value in the past month. I see a few reasons for this.

Firstly, profit taking. The rise of the share price this year has been from retail and institutional investors. For the latter, December is a period where trades usually get closed to tidy up the year. Particularly for hedge funds, for accounting processes, a lot of stocks will be sold (even if they get bought again in January). For retail traders, it might not be for accounting purposes, but to help fund Christmas presents or other needs!

Secondly, souring sentiment. This has come from a couple of different places. Partly it has come from insiders such as the CEO and CFO selling off large chunks of shares. Last week, CEO Adam Aron sold $9.65m worth of AMC stock. This had been clearly stated before it happened, but it’s still a negative for the AMC share price. 

Souring sentiment has also come from the rise of the Omicron variant. It’s still too early to know if restrictions will need to be put back on certain sectors. However, cinemas are a likely target to have restricted capacity in order to help stem the spread of the virus. In the event, this would hamper revenue for AMC in 2022.

Is the party over for the AMC share price?

Personally, I do think that the party is over for AMC. I think most investors deep down knew that the meteoric rise of the share price earlier this year was driven by speculation rather than fundamental reasons. Whatever the reason was, it didn’t stop some investors making high profits in a short space of time!

I think that some are realizing that speculative investors are moving on to new opportunities. I’d imagine some are looking to metaverse stocks instead.

Does the AMC share price really have good value, even at $23? Given the financial results recently, along with concern over operating under Omicron, I doubt it. Therefore, I won’t be looking to buy shares in AMC anytime soon. Rather, I’ll look to try and find the next key theme for 2022, that I think could be regarding the metaverse.

Jon Smith and The Motley Fool UK 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.

Tech stocks offer some of the best value for money on the market, in my view. With low overheads in comparison to other businesses, they can become money printing machines. Amazon, Google, Microsoft, and Facebook are some of the most highly valued companies on the stock market. But this means investors have already found their value. Lots of investors, including Charlie Munger, are looking to Chinese counterparts in the hope that history will repeat itself.

But I think we have some excellent tech companies right here in the UK.

Frictionless transfers

Wise (LSE: WISE) is a company that facilitates money transfers and currency exchanges in near real time. This tech company just went public earlier this year and exploded in value, reaching a high of 1,140p in September. But the share price has, in recent months, been seeing a consistent downtrend and has fallen to 762p. This is to be expected as the market tries to determine the true value of the company.

Wise has increased revenue year on year, but has so far kept profit margins small as it continues to expand its operations. I do think that reduced travel over the next few months could push the share price down further. But revenue actually increased over the pandemic months, which tells me there is demand for this service regardless of how many people go on holiday. I’ll definitely be adding it to my portfolio.

Public sector systems

Idox Group (LSE: IDOX) builds software and data collection programmes for clients across the UK. Its largest customer base is the public sector as councils and government agencies use systems Idox designs to help with collecting and organizing important data. Just this week the Scottish Council of Comhairle nan Eilean Siar began using an Idox software programme to help organize its building and planning permissions data.

Idox currently operates with a very small profit margin and if anything goes wrong this could upset the company’s outlook.

But, once a computer system becomes entrenched in a company or institution and all of its employees learn to rely upon it, then it often becomes very difficult to remove. If this happens then I think the sky’s the limit for Idox.

Idox currently trades for a very low 69p and I’ll be adding it to my portfolio shortly.

Cyber security tech

Darktrace (LSE: DARK) has been in the headlines a lot this year. Like Wise, it exploded into value and rushed all the way up to the FTSE 100 in just a few months. But also like Wise it has seen a big fall in value as insiders sell off their shares and it has failed to grow fast enough to justify the high price.

Despite this, Darktrace has been growing. Revenues are up and expected to continue this way over the next few years. I definitely think that the share’s all-time high of 945p was unrealistic, but the current price of 397p is more reasonable. There could still be further downward inertia as shareholders lose their nerve, but the business remains strong, offering a high-quality product on a subscription model. I’ll be adding it to my portfolio but don’t expect to see it pay off for several years.

James Reynolds 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.

Cheap UK stocks are a popular choice for many investors, especially when they come with a sizeable dividend yield to generate a passive income. After all, the lower the price, the more potential room for growth over the long term.

With that in mind, I’ve spotted three companies that meet this description. And with strong tailwinds in their respective industries, I’m quite tempted to add these UK stocks to my portfolio today. Let’s explore.

A top UK mining stock that doesn’t do any mining

The mining industry is hardly a simple area to operate in. Apart from needing all the engineering and ecological expertise, finding, developing, and extracting resources from the ground is fraught with uncertainty. That’s what makes Anglo Pacific (LSE:APF) so interesting to me.

The firm doesn’t engage in any of the typical mining activities. It instead simply provides funding for other leading businesses, like Rio Tinto, to establish a mining site. In exchange for this financial support, they receive a portion of extracted materials as a royalty payment.

That still means the company is exposed to the risk of fluctuating commodity prices. However, it doesn’t have to contend with the extensive risks associated with exploration.

Today this UK stock trades at 131p and offers a chunky 6.6% dividend yield. And after recently adding cobalt to its mineral portfolio, the firm looks primed to continue delivering a large passive income thanks to surging demand for electric vehicle batteries.

Generating a passive income with wind

With global warming becoming an increasing problem, the shift towards renewable energy sources has been accelerated. And with the technology becoming cheaper and more reliable, Greencoat UK Wind (LSE:UKW) is enjoying some favourable tailwinds.

The company owns both on- and offshore wind farms across the UK, generating revenue by selling green electricity. Electricity prices are limited by regulators meaning this stock has no pricing power. That obviously exposes its profit margins to the risk of being squeezed, as operating expenses are primarily fixed.

However, at today’s price of 136p, shareholders are enjoying a 5.25% dividend yield. And with inflation pushing utility prices up, the firm seems to be in a powerful position to reap greater profits in 2022.

Solving the e-commerce storage problem

After the pandemic forced many non-essential stores to close their doors, consumers turned to online shopping for their retail therapy. So, it’s not surprising that the level of investment in retailer e-commerce solutions has suddenly surged.

Unfortunately, that created a bit of a problem. There is only so much warehousing space in ideal locations available. As such, the rental cost per square foot is climbing quite rapidly. And while that’s horrible news for retailers, it’s music to the ears of Warehouse REIT (LSE:WHR).

The firm buys, refurbishes, and rents previously dilapidated warehouses to online businesses – returning the profits to shareholders through dividends. At today’s share price of 169p, the UK stock yields a 3.7% passive income for investors.

Of course, the commercial property sector is filled with competition that could drive up future property acquisition prices through bidding wars. Should management start overpaying for new locations, it could compromise the dividend stream in the future. But for now, Warehouse REIT seems to be ready to thrive in 2022 and beyond. At least, that’s what I think.

Zaven Boyrazian owns Anglo Pacific. The Motley Fool UK has recommended Anglo Pacific, Greencoat UK Wind, and Warehouse REIT. 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 Tesla (NASDAQ:TSLA) share price has had a bit of a bumpy ride over the past month. In fact, since the start of November, the US stock has fallen by around 20%. While the 12-month return is still an impressive 51%, it does beg a simple question. Now that Tesla is trading below $1,000, is it a buying opportunity for my portfolio? Let’s take a closer look.

A thriving electric vehicle business

Despite what the falling Tesla share price would suggest, the company continues to storm ahead. Fuel shortages and rising oil prices further increase consumer interest in owning an electric vehicle. Meanwhile, improvements in battery technology have drastically improved the range capabilities. And businesses seeking to lower their carbon footprint are starting to upgrade their vehicles fleets.

This has created quite a favourable environment for Tesla to thrive in. And looking at its latest third-quarter earnings, revenues continue to grow at impressive double-digit rates. Moreover, thanks to improvements in operational activities, profit margins are also getting wider.

Needless to say, this is all quite positive. And it seems to be the primary driver behind Tesla’s impressive share price momentum since the start of 2020. But if that’s the case, then why is the stock falling now?

Is Tesla’s share price too high?

With a CEO as influential as Elon Musk, it’s easy to understand how investors could be getting a bit too excited. As such, the valuation has reached some pretty absurd levels, with enormous expectations built into it. Even after the recent tumble, the stock still trades at a price-to-earnings ratio of over 300. And while the group may not be optimised for profits at the moment, its price-to-sales ratio still stands at a lofty 19 times.

While some investors may passionately disagree with that conclusion, it seems management doesn’t. Several board members have begun selling off some of their shares in multi-million-dollar deals. That includes Musk, who sold $8.8bn of Tesla shares in November. And just yesterday, he sold a further $906.5m of his stake in the business.

Generally, seeing insiders sell this much stock indicates they believe the shares are overvalued. But now that the price has fallen, should I consider adding this business to my portfolio?

Time to buy?

All things considered, Tesla continues to impress me with its progress over the years. However, even after the recent 20% drop, I still believe the Tesla share price is being inflated by over-optimistic investors.

Therefore, if the company starts to show any sign of a slowdown or potential weakness, the share price could be in for some serious volatility. Personally, I’m not interested in adding that risk to my portfolio. So, I’ll be keeping this company on my watchlist until a better price emerges.

Zaven Boyrazian 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 Darktrace (LSE:DARK) share price hasn’t had the best run recently. In fact, since late October, the stock is down nearly 60%, falling to 393p today. That’s still higher than its April IPO closing price of 330p. But it does raise the question: after rising so high, why did it later collapse? And is this actually a buying opportunity for my portfolio? Let’s investigate what’s going on.

A future king in cybersecurity?

With the world becoming more dependent on technologies like cloud computing, it’s not surprising that the number of cyberattacks is on the rise. While that’s undoubtedly horrible news for most businesses and consumers, it has created a favourable environment for the cybersecurity industry. After all, the more threats, the more demand for such services.

Darktrace is a relatively new entrant to the sector. But it came in guns blazing with its AI-based platform. Using machine learning, this system automatically evolves each time it encounters a new threat. Once it understands how a piece of malware operates, it should quarantine the infected files and prevent any damage or exposure to sensitive data. In simple terms, it should behave like a self-teaching immune system for computers.

Looking at the figures published in its latest Annual General Meeting statement, this technology is proving to be popular. The firm now serves over 5,900 customers, 86% of them using two or more of its products. Consequently, revenue in its 2021 fiscal year (June to June) grew 41%, pushing its annualised revenue growth rate since 2018 to a staggering 51%.

Needless to say, that’s a lot of growth. And yet the Darktrace share price seems to disagree, given its downward trajectory. So, what’s going on?

The Darktrace share price versus uncertainty

There are undoubtedly numerous factors influencing the share price. However, the problems first started emerging after an analyst at the investment bank Peel Hunt released a pretty scathing report.

It claimed that the technology might not be as good as described on paper. In fact, the report stated that some customers described the AI-driven platform in negative terms. This could explain why the churn rate increased in FY21, with 7.7% of Darktrace clients deciding to terminate their relationship.

This is actually a risk I highlighted back in September. And combining bad news with Darktrace’s sky-high valuation is a recipe for a collapsing share price. But Peel Hunt placed its target at 473p. That’s around 20% higher than where the stock is trading today. Does this mean now is the time to buy?

Time to buy?

Today’s share price places Darktrace’s market capitalisation at around £2.7bn. That puts its price-to-sales ratio at approximately 12.7. This is certainly not cheap, but far more reasonable than previous levels. However, while this may be a buying opportunity, I’m concerned by comments surrounding its technology. After all, cybersecurity businesses live and die by their ability to protect customers’ data and systems.

If the company can’t meet the security requirements of its customers, then maintaining its current growth rates will be challenging over the long term. The future could be bright for the firm, but  I’m going to wait and see how Darktrace performs as we enter 2022 and won’t be buying for now.

Zaven Boyrazian 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.

I often hear people say that they just do not have enough savings to start buying stocks yet. And this is more likely to be true when we are young and have not built a pool of investible funds yet. I do think, however, that we should start investing wherever we are, with what we have. And over time, we could see the benefits of starting early. 

What can I buy for £30?

In fact, if I were to start investing today with very little money to spare, I could technically buy one of the best dividend yielding FTSE 100 stock for just £6. I am talking about the FTSE 100 industrial metals miner and steel manufacturer Evraz, which pays me a yield of 13.2%. The stock has an eye-watering dividend yield of 13.2%! This means, that for every stock I buy, I earn almost 80p in dividends per year.

To make the most of  my investments, ideally I should aim for as low a trading fee as possible. We at The Motley Fool like to recommend it to be no more than 2% of the total value of investment.  There are trading platforms that offer a fee of less than £2 a trade, so if I am going to start investing, I could consider those. Also, the stamp duty on any electronic transactions is 0.5% of the trading value, which I should take into consideration. Based on this, I would invest £120 in a month in the stock or just £30 per week. 

What happens in a year

This would amount to an ownership of 20 Evraz shares every month and 240 in one year. At the current share price, this could result in a dividend payout of £190 in a year. Even if I deduct the transaction costs and stamp duty from this return, I still earn a double-digit yield of 11%. Now, this is not exactly a life-changing amount. But it is indicative of how even the smallest amount of money could really amount to something in a relatively short period of time if invested right. 

Of course, not all shares have a yield of 11% — many are much lower — and high-yield shares often come with risks.

But it is still possible that my income could grow over time. This would allow me to increase my level of investments. And if I keep ploughing any dividends back into more investments as well, it might just be a matter of time before I have a pretty substantial base of savings

How to keep generating passive income

There is of course always the possibility that the stock’s dividend yield could change over time. For instance, in the case of Evraz, next year could be a weaker one. The commodity boom is expected to slow down a bit and it is facing higher taxes in its home country of Russia as well. But going by its past dividend history, the yield could still be substantial. Also, there is nothing that stops me from moving my money around to other opportunities to generate a passive income over time either. 

Manika Premsingh owns shares of Evraz. 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.

Stock markets are uncertain again and the FTSE 100 index closed lower by 1.1% yesterday. On its own, a single day’s decline is not necessarily a big deal, but it does reflect ongoing nervousness among investors. 

How I’m investing via my Stocks and Shares ISA now

So when I think of my Stocks and Shares ISA investments for the remainder of the year, or even the next tax year, I have one idea in mind. My focus will now be on dependable, long-term FTSE 100 investments. I have already invested in stocks that are either cyclical in nature or are recovery plays. These stocks should be capable of giving me great returns during good times, but they are equally likely to falter during bad times. And since we are still in an uncertain period, I would now like to shift my attention towards stocks that have a history of long-term returns. 

As such, I have zoomed in on two FTSE 100 stocks that I believe could be good to hold in the long term. And they could also balance out the ongoing fluctuations in my current investment portfolio. Since they have given good returns over time, I reckon that the Stocks and Shares ISA is a good wrapper for them, because it gives me tax relief on capital gains. 

2 FTSE 100 stocks I like

The first of my picks is the industrial equipment rental company Ashtead. A lot of its business comes from construction, which is a cyclical sector. In fact, the latest numbers on the UK economy show that the construction industry actually shrank in October from the month before. 

But I still like the stock. This is because majority of its business is derived from the US, which has a huge infrastructure plan in place. A boom in the industry could keep demand for industrial equipment rental strong. Also, its long-term share price chart is encouraging. Over the past decade, it has been more on the rise than not. It has been growing and has given investors some rich returns. Its latest results are also encouraging and suggest that the future looks bright. 

I also like speciality chemicals manufacturer Croda International. It works with a variety of sectors ranging from personal care to industrial chemicals and life sciences. This makes it somewhat slowdown-proof, I feel. And its results show that as well. It has been doing quite well, and there is no indicator I can see that says the future will be different. 

The downside

It is quite pricey though, with a price-to-earnings (P/E) ratio of 58 times, far more than Ashtead (which is at 28 times). Also, it goes without saying, that the future could look very different from the past. This is especially so, if the virus situation gets worse, Ashtead in particular might take a hit. But even Croda International might not come out completely unscathed by, say, another round of lockdowns. 

My takeaway

I would not give into these fears though. In fact I might just invest the entire £20k allowance for the next tax year in my Stocks and Shares ISA in these two stocks.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International. 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 Entain (LSE: ENT) share price has been on a bit of a wild ride of late. The stock is up nearly 50% over one year, which is an excellent result for shareholders. But this does mask the volatility that started in September. At the time, the share price rocketed by 24% in as little as two days when DraftKings showed an interest in acquiring the company. Since then though, the stock has plunged almost 34%.

So, what’s gone wrong? And where will the Entain share price go next? Let’s take a look.

The Entain share price volatility

As mentioned, the stock rallied in September when Entain said it had received interest from DraftKings about it potentially acquiring the company. The share price before the announcement was 1,960p, but there was no indication at that point about the price that DraftKings might be willing to pay to acquire Entain.

On the following day, Entain said that DraftKings proposed an offer of 2,800p per share. This represented a premium of 46.2% to the share price before speculation around the acquisition began. However, a little over a month later, DraftKings said it no longer intended to make an offer to buy the company.

The stock has almost been in freefall since this speculation. As I write today, the share price is 1,572p, so that’s far below the initial offer of 2,800p from DraftKings.

This says to me that there might be value here, and that the Entain share price might now be in bargain territory.

The Entain bull case

Entain is a sports betting and gaming company and owns brands such as Coral and Ladbrokes, among many others. The company is growing significantly online, and recorded its 23rd consecutive quarter of double-digit growth online in the period 30 September. I expect this to continue in the months ahead, and for the US to be a key growth market going forward. This is due to the legalising of sports betting in the country after a Supreme Court ruling in 2018.

Entain has a joint-venture with MGM Resorts named BetMGM, which is aiming to be a leader in the sports betting market in the US. As it stands, BetMGM has a 23% market share of the US sports betting and iGaming sector.

City analysts are expecting a huge 350% growth rate in profit before tax (PBT) this year. In 2022, PBT is forecast to grow by a still impressive 54%. The forward price-to-earnings ratio is 18 for 2022, which I consider reasonably valued taking into account the growth expectations for the company.

Risks to consider

Even though the US has legalised sports betting, the sector is always open to tighter regulation. This is something to keep in mind with Entain as it operates in global markets, including the UK. Sports betting is also a competitive market, with companies like DrafKings in the US, and Flutter Entertainment in the UK.

Nevertheless, I think Entain looks to be a good opportunity here. DraftKings initially valued the company at 2,800p, which suggests there’s significant upside in the Entain share price. I’m considering the stock for my portfolio.

Dan Appleby 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.

At yesterday’s close, the FTSE 100 index was down by less than 1% compared to Friday’s close. This can be chalked up to the fluctuations of any average trading day. But it was a far from routine day for travel stocks. The two biggest losers were International Consolidated Airlines Group (LSE: IAG) and Rolls-Royce (LSE: RR).They were down by 5.1% and 4.8%, respectively. 

Omicron variant’s shadow hangs over travel stocks

Much as I would like to think of this as a random occurrence, I doubt if that is so. I think this is the Omicron variant’s shadow hanging over them. On 25 November, the threat of the latest variant became apparent as direct flights from six African countries were banned. Since then, these stocks have suffered disproportionately. 

The IAG share price lost more than 17% of its value (although it’s up almost 11% in a year), while Rolls-Royce stock was down by almost 15% (and down 1.5% in a year). By contrast, the FTSE 100 index showed a smart recovery recently after an initial wobble. It even rose above the levels last seen at the end of November. And as of the last close, it was down by only 1.1% since 25 November.

At the present time, IAG and Rolls-Royce are trading not that much higher than penny stocks. IAG was at 130p and Rolls-Royce at 117p  at Monday’s close. And it is quite possible that an even bigger dip is in store. The first Omicron variant related death has been reported. Were I feeling adventurous as an investor, I would be tempted to throw my hat in the travel ring. Or throw another hat, I should say, because I have already bought IAG stock. 

Would I buy these FTSE 100 stocks?

But there is such a thing as investing fatigue as I am beginning to realise, when it comes to focusing on recovery shares. Travel and travel-related stocks have had it so bad for so long, I am starting to doubt if they will be able to get their act together any time in the near future. Consider this. It has been almost two years since Covid-19 first made itself known and around one year and nine months before the seriousness of the situation really started becoming apparent. Two years of relatively limited business has taken a toll on these companies’ finances. 

I would hold out some hope for the future, but the situation still looks uncertain. It could, of course, happen that there is a rapid turnaround from this point onwards. The variant is known to be milder than some others, like Delta. And a lot of people have been double vaccinated already, even if they have not received a booster shot yet. 

My assessment

But realistically speaking, this optimistic scenario is unlikely. I will watch the situation unfold and only then decide whether to buy either more of IAG or any of Rolls-Royce. In other words, it might not be game over for them, but I am not willing to buy them right now. I would much rather focus on more promising FTSE 100 stocks.

Manika Premsingh owns shares of International Consolidated Airlines Group. 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.