Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading
Shares of Saga PLC (LON: SAGA) are up 33.4% in 2021 despite the spread of new variants of the coronavirus pandemic that threaten the global travel industry.
The company, which specialises in organising trips and tours for people over 50, had seen its stock price rally higher since the start of the year before the latest decline erased some of the gains.
Saga raised £250 million in June via bond issue with an annual interest rate of 5.5% and used some of the monies to settle more expensive outstanding debts and boost its working capital.
The capital raise showed that investors have more confidence in the company. At a time like this last year, the company was struggling to find lenders with little success due to the impact of the coronavirus pandemic.
Most analysts expect Saga to generate earnings per share of 15p this year, with the figure rising to 59p by the 2023 financial year. By this time, the company will have returned to profitability.
Like other companies in the travel and tourism sector, Saga faces a significant threat from the different emerging strains of the coronavirus that could lead to other lockdowns in future, bringing global travel to a standstill once again.
However, if everything goes according to plan, Saga will likely be profitable by 2023, driven by higher earnings as most of its cruises resume operations.
The company is also under new management, which is keen to return it to profitability by avoiding the mistakes made by the previous management team.
Saga shares are trading above a crucial support level and could bounce higher once they hit this level. However, investors should monitor the stock’s reaction before deciding to open new bullish positions. A convincing break below the support level would invalidate the bullish trade.
*This is not investment advice.
Saga share price.
Saga shares are up 33.35% in 2021given up a significant portion of their previous gains.
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