Pfizer vaccine: would I buy easyJet and IAG shares now?

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Pfizer vaccine: would I buy easyJet and IAG shares now? Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Image source: Getty Images Edward Sheldon has a position in Fundsmith. 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. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Like this one… Simply click below to discover how you can take advantage of this. Enter Your Email Address Our 6 ‘Best Buys Now’ Shares On Monday morning, I wrote a rather bearish article on easyJet (LSE: EZJ) shares. Noting that easyJet had been forced to scale back its flying schedule due to lockdown measures and that analysts were downgrading EPS forecasts, I said that EZJ shares were risky.It’s fair to say that article didn’t age well! A few hours after it was published, news of Pfizer’s Covid-19 vaccine broke, and easyJet’s share price jumped 35%. Clearly, a lot of investors see a vaccine as a game-changer for the airline industry.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Would I invest in easyJet and other airline stocks such as IAG (LSE: IAG) now that an effective vaccine may not be too far off? No, I wouldn’t. I remain convinced that from a long-term investment point of view, there are much better stocks to buy.“A machine for losing money”In the short term, there’s every chance that easyJet and IAG shares could keep rising. After all, these stocks have been well and truly hammered this year. EasyJet, for example, is still down nearly 50% year to date.History shows though that in the long run, airlines tend to be poor investments. One reason for this is that the airline industry is extremely capital intensive. To keep a large fleet of planes running smoothly costs a colossal amount of money.Given the huge costs they face, most airlines simply don’t earn a return above their cost of capital over the long term. This means that they end up destroying shareholder wealth. Fundsmith manager Terry Smith explains this concept well in a video here. Smith says that airlines are a “truly awful sector” from an investment standpoint and that they are a “machine for losing money.”Source: FundsmithThe world’s greatest investor, Warren Buffett, has a similar view on airline stocks. “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines,” he said in 2007.Buffett actually went against his own advice and bought airline stocks a few years back. He then got burnt badly in the Covid-19 stock market crash. He has since dumped all his airline stocks.easyJet and IAG: too many things can go wrongAside from the capital intensive nature of the industry, another problem with airline stocks from an investment point of view is that so many things can go wrong.For example, a spike in the oil price can impact profits negatively. Meanwhile, a terrorist attack can badly affect sentiment towards the sector and send airline stocks down sharply.Speaking of things that can go wrong, Covid-19 could still present a challenge for companies like easyJet and IAG. A vaccine will help the industry, for sure. But it’s unlikely to be a magic bullet. In my view, it could take years for the airline industry to get back to where it was pre-Covid.Better stocks to buyAll things considered, I’m not going to invest in easyJet or IAG shares, despite the news of the Pfizer vaccine.These airline stocks could keep rising in the short term. However, history shows that they’re unlikely to be good long-term investments.As a long-term investor, I think there are better stocks to buy. Edward Sheldon, CFA | Friday, 13th November, 2020 | More on: EZJ IAG See all posts by Edward Sheldon, CFAlast_img

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