To say that travel stocks have had a difficult past year would be a gross understatement. From airlines to coaches, these companies suddenly found themselves out of business and had no way of knowing when they would operate fully again. One of them is the FTSE 250 stock National Express (LSE: NEX).
National Express reports strong update
But things are on the mend for the coach operator, as is evident from its trading update released today for the January–April 2021 period. Its revenue for the period was down by 16% from last year because of continued Covid-19 restrictions. But, it was up 50% from last year for April, indicating the possible impact of a normalising business environment.
There was even better news on profits. Operating profits for the past four months were higher than last year because of cost reductions. Further, the company says that performance in March and April alone is “strongly ahead of last year”.
Improved share price for the FTSE 250 stock
This continues the trend of positive updates for the company. It is also likely one of the reasons why the National Express share price remains elevated. It is up by more than three times from the stock market crash of last year and up 41% from the same time last year.
But, the National Express share price has been around 300p levels since February, which is still way below the 473p levels at which it started 2020. In fact, in the past year it has never once gone back up anywhere close to the 400p levels.
Why travel stocks have lagged behind
Now that things are getting back to normal, I am hopeful that the share price can rise further.
Some other reopening stocks like FTSE 100 retailers JD Sports Fashion, Burberry, and NEXT have surpassed their pre-market crash levels. This is an indication of investor interest in them.
Travel stocks, however, have lagged. One reason is the prolonged brakes on their growth. Another is the financial decimation that has happened as a result. A third is that with virus variants around, we do not know if the lockdowns are over for good even as we get vaccinated.
Can the National Express share price rise past 400p?
Among travel stocks, I think some are better placed than others. I’d point to National Express, with its operating profits in 2021 so far, as an example of one of the better placed ones. Its operations across the US, Spain, and the UK are showing encouraging signs of recovery. Airlines like easyJet by comparison, are still loss-making.
Because of this, I do think that National Express has a good chance of a further share price rise. But the continued uncertainty about the pandemic means I cannot say for sure if the share price will zoom past 400p any time soon.
If all goes well though, I think it can. It has risen by more than 100p two times since the start of 2020.