How to Buy IAG Stock: an investment guide

Buying IAG stock: how to invest

1. Research IAG shares
2. Open a share dealing account online or download the IG Invest app
3. Decide how many shares you want to buy
4. Place your investment

How much will it cost to buy IAG stock?

What to consider before buying IAG shares

Investing in IAG shares carries risk and you could end up losing money if the markets turn against you.

To help minimise this risk, it’s important to develop an investment strategy and consider the following things.

What are your long-term goals?

Understanding your long-term goals is essential for making informed investment decisions. Whether you’re saving for a house, retirement or any other major purchase, your goals will impact the amount of capital you’re looking to invest and the amount of time you plan to hold IAG shares.

When buying IAG shares there’s always the risk you could lose money. It’s therefore important to assess whether or not you can afford to invest in IAG shares if the market performs poorly. Having a clear understanding of your financial resilience will enable you to make more sustainable investment choices.

When will you need the money?

It’s important to make sure that your investment strategy aligns with your timelines. Investing usually provides better returns than cash savings, for maximum growth potential these shares are usually held for several years.

If you’re likely to need the money within the next 1-3 years, then lower risk options like bonds or savings accounts are recommended. If, however, you’re looking to invest, you should look to develop a balanced portfolio with a range of stocks and safer assets.

Historically IAG’s share price has been highly volatile. It’s therefore considered a higher risk stock where strong gains are possible, but so are potential losses. Because of this, IAG is a good stock to add to your investment portfolio if you’re looking to hold the stock for several years.

How much risk can you take?

Financial markets are unpredictable and there’s a risk you could lose money. To help minimise losses, it’s essential that you come up with a risk management strategy.

• Investing in high and low risk assets
• Staying up to date with market trends that may impact your investments
• Look to build wealth over several years
• Use risk management tools such as stop and limit orders

How to research IAG stock as an investment

Fundamental analysis is one of the most effective ways to evaluate IAG’s financial performance. This method examines external factors that may influence its stock price and delves into its financial statements. For the best overview, it’s helpful to compare IAG’s performance with other airline stocks. Here are some key things to look out for:

P/E ratio

P/E ratio helps investors determine whether a stock is overvalued or undervalued. What qualifies as a good P/E ratio varies by industry. So, when deciding whether to invest in IAG shares, it’s important to compare its P/E ratio with other travel stocks for a clearer perspective. To find IAG’s P/E ratio, simply its current share price by its EPS.

Business model

A business model outlines how a company generates revenue through its products, services, cost structure and target markets. As the company grows and market conditions evolve, successful businesses make alterations to their models to align with shifting consumer demand.

IAG’s business model operates by owning multiple airlines including British Airways, Vueling and Iberia. Each airline keeps its own name and branding, but behind the scenes, they work together buying fuel and planes in bulk to keep costs down. They also share the same maintenance teams and technology.

On top of this, IAG partner with other airlines across the world to offer a wider range of flights, taking profit from ticket sales, seat upgrades, frequent flyer points and cargo transport.

Its business model enables IAG to compete with both luxury and budget parts of the airline industry.

Return on Equity (ROE)

Expressed as a percentage, ROE measures IAG’s return on assets. It’s calculated by dividing net income by stakeholder equity. A high ROE would suggest efficient use of investor capital whereas a lower ROE could indicate weak profitability compared to what shareholders have invested.

Why buy IAG shares

Investing in parent company of Iberia, British Airways and Vueling, IAG provides exposure to both high- and low-end airlines as the company’s diversified portfolio enables it to capture demand across all travel segments.

The company’s two main airports in London-Heathrow and Madrid-Barajas are well located to attract a high number of premium customers which help drive profitability.

Airline stocks can be volatile and are highly dependant on strong economic performance and low fuel prices. If either of these things change, share prices can fall. Although not immune to the ups and downs of the airline industry, IAG’s strategic business model where its costs are shared across its diversified portfolio of airlines, provides IAG with a level of security when the economic climate becomes challenging.

When IAG performs well, it rewards shareholders with dividends and share buybacks which it invests back into the company.

If you’re looking for exposure to the airline industry, buying IAG shares could be a good investment.

What to do after you buy IAG shares

After buying IAG shares, make sure to track your position through our online platform or the IG Invest app. Stock prices can fluctuate, so it’s important to regularly monitor your position and to stay on top of relevant news that could impact IAG’s stock performance.