The FTSE 250 index has had many ups and downs over the past year. Overall it’s down nearly 16%. In just the past three months, it’s fallen around 9.5%. I think that these dips provide me with opportunities to load up on two recovery stocks with a spare £2,000. Let’s take a closer look.
Clearer skies ahead?
TUI (LSE:TUI) was decimated by the pandemic. I’m hardly surprised that its share price has plummeted 55.5% in the past year. Currently trading at 164p, the firm has incurred heavy losses over the past two years.
The travel company sank to a €3.2bn pre-tax loss for the year ended September 2020.
Fast-forward one year, to September 2021, and pre-tax losses had narrowed slightly to €2.4bn. While this gave me confidence that a potential recovery was in progress, this is still a significant loss.
This was caused, of course, by a lack of international travel. When the pandemic struck, almost every country closed its borders and introduced tight entry restrictions. This severely limited TUI’s ability to operate.
Recently, however, the business has stated that summer bookings for 2022 are running at about 85% of 2019 levels, while losses halved for the six months to 31 March. Over those same six months, revenue jumped to €2.1bn, from €248m for the same period in 2021.
There are still challenges ahead, like staff shortages, but if TUI can get back to full working order, I think the share price could move markedly higher in the coming months.
Are we through the choppy waters?
Like TUI, Carnival (LSE:CCL) has suffered over the past two years. The shares have fallen 61% in the past year to currently trade at 725p.
As a brief reminder, Carnival is an operator of cruises. While the company had around $6.4bn in cash at the end of February, it also had spiralling debt and costs.
To cope with the rough seas of the pandemic, it took on significantly more debt. This now totals somewhere in the region of $20bn.
However, passenger ticket revenue for the three months to 28 February was $873m, up from just $3m during the same period in 2021. Furthermore, total revenue (including onboard sales) amounted to $1.6bn, up from $26m year on year.
Despite this, with more voyages come more costs. The business is also not immune from the challenges of inflation and surging energy prices. These could eat into future balance sheets, given the broader economic environment at the current time.
While a recovery may be on the cards here, the debt issues and increased costs could make it slower than expected.
Overall, these two firms have endured a torrid time recently. While there are risks attached to buying shares in either firm, I will split my £2,000 equally and purchase shares in both in advance of a potential travel recovery.