IAG’s share price is up another 31% per month but its P/E is still just 6.74!

For me, i AG (LSE: IAG) share price will fall as it ran in 2024. I have circled the stock repeatedly over the past 12 months, but never had the courage to ride.

In retrospect, I wish I had, as IAG shares are up an impressive 81.58% over the past 12 months. That makes the owner of British Airways FTSE 100The fifth best player.

On November 29, 2023, I wrote that IAG shares are looking “Incredibly cheap, trading at only 3.8% of earnings forecast for 2023”. As a lover of cheap stocks, I was very tempted. So what’s holding me back?

Can this FTSE 100 stock recovery continue?

The first obstacle was its huge debt. It stands at a whopping €11.6bn, a legacy of the pandemic, when ships were grounded and had to borrow heavily just to stay afloat.

IAG has not paid a dividend since Covid hit and while CEO Luis Gallego has promised to resume shareholder payments once its balance sheet and investment plans are complete. “protected”he did not set a date.

I saw the potential of IAG, even then. Q3 operating profits just jumped 43.5% year-on-year to €1.75bn with flights at 95.6% capacity.

But I made my choice and it turned out to be wrong. Here it is, in its full glory: “Sorry, but I’m not sure. IAG remains exposed to oil price uncertainty, economic worries and political tensions, and no profit can compensate us.”

That sound you hear is the empty laughter of my sad self-loathing.

The world is flying happily again, especially in IAG’s main markets in the North Atlantic, Latin America, and European markets. Revenues and profits are rising, while IAG is managing costs ethically, helped by effective spending across its various brands, including Iberia, Aer Lingus and Vuelo, as well as BA. And it has been given a further boost by falling oil prices.

But did it fly too fast?

First-quarter pre-tax profit, published on 2 August, smashed forecasts of €909m. With free cash flow reaching €3.2bn, Gallego has announced that it is restarting dividends. IAG’s forecast yield is 2.99% in 2025. Not bad for beginners.

IAG shares still look good value to me, with a price-to-earnings ratio of 6.74. That’s less than half the FTSE 100 average of 15.1 times.

There are still risks. While the US economy looks healthy, Europe’s does not. And airlines will always be vulnerable to geopolitical threats, natural disasters, and economic downturns.

IAG still owes 7.77 billion euros. That is predicted to drop to €6.97bn by 2025. It is paid off faster than predicted. But what worries me the most is that I come to the party too late. Recovery has a price.

Twenty-five analysts have set one-year price targets for IAG shares, and the average estimate is 295.3p. That’s up 3% from today.

Too bad I failed to buy shares last year. I would feel like an even bigger chump if I went in for a while as they backed off. Thankfully, I can see many other FTSE 100 stocks that I would like to buy right now. Maybe this time I’ll actually buy them.