Thomas Cook’s share price is up 64% in THREE days! Is it time to buy back in?

Thomas Cook Group plc (LON: TCG) is back on the warpath! But can it keep on clattering higher?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Thomas Cook (LSE: TCG) had yet another shocker in July, its share price slipping 58% during the course of the month. On this occasion, though, it wasn’t the release of chilling trading data which encouraged investors to rush for the exits. Instead, news of a major refinancing plan caused the travel operator to sink to its cheapest since first listing back in 2007.

Thomas Cook’s started off August on the front foot, however. Indeed, it’s up a mighty 30% as I type in Friday business. Could this be the start of a stunning recovery?

Turkish delight

Shares have flown in recent days as news of a much-needed cash injection from a significant Turkish investor has emerged. Neset Kockar, founder of holiday colossus Anex Tourism Group, secured a 6.71% stake in Thomas Cook on Wednesday before going shopping again yesterday. As it stands Kockar holds an 8.01% stake in the British business.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

It’s not just that investors are celebrating the critical boost for Thomas Cook’s battered balance sheet. The £750m liquidity injection from its lenders and Chinese travel titan Fosun which was proposed last month would only give it sufficient liquidity to trade over the winter season.

In an internal e-mail seen by Bloomberg today, Kockar said that he believes the small-cap “has more value and potential than what is being discussed recently, particularly with the skillset and complementary capabilities Anex Tour shall put forward.”

Anex is a major player across Russian and Central and Eastern European travel markets, and investors are hoping it’ll bring some of its magic to Thomas Cook.

Flying high, or ready to crash?

Is it finally time to buy back into the UK operator? Not in my book. While the Anex and Fosun investments have put Thomas Cook on a safer financial footing, as well as bolstering the brain trust over at the business, I’m not convinced either will prove little more than a temporary sticking plaster.

Cutthroat competition among the holiday providers continues to play havoc across the sector and the number of casualties continues to grow. Just today, Malvern Group — owner of booking website LateRooms.com and operator of Superbreak Mini-Holidays — announced it had collapsed into administration. And earlier this week, Ryanair advised further fare-cutting had caused pre-tax profits to sink 21% in the three months to June.

This fight to the bottom isn’t the only factor threatening to keep revenues at Thomas Cook in the doldrums. I’m speaking, of course, about a prolonged downturn in broader consumer spending due to uncertainty over Brexit.

Besides, under that refinancing package announced last month, Thomas Cook plans to convert “a significant amount of the group’s external bank and bond debt” into equity. Even if its lenders agree to such a proposal the move will considerably dilute the holdings of its existing shareholders.

While Thomas Cook’s forward P/E multiple around 12 times might make it cheap on paper, I think the risks to investors remains far too considerable. For that reason, I’m happy to keep avoiding it.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. 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.

More on Investing Articles

Rolls-Royce's Pearl 10X engine series
Investing Articles

Rolls-Royce shares have reached £10. Too late to buy?

Selling for pennies as recently as 2022, Rolls-Royce shares recently topped a tenner apiece. Our writer assesses whether he's too…

Read more »

UK coloured flags waving above large crowd on a stadium sport match.
Investing Articles

Meet the $2 stock up 366% that UK investors are piling into

UK stock investors have been snapping up this meme stock recently. Incredibly, it has more than quadrupled since June! What's…

Read more »

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

Down 49%, is this well-known name the deep-value stock it seems?

Our writer has been tempted to add more B&M shares to his portfolio after a recent tumble. So what's holding…

Read more »

Abstract 3d arrows with rocket
Micro-Cap Shares

After falling 80% from a 52-week high, is this penny share a screaming buy?

This penny share company skyrocketed earlier this year, but the share price has since fallen back. Is it a new…

Read more »

British Pennies on a Pound Note
Investing Articles

This penny stock rose 49% in a year. Here’s why it may still be a terrific bargain

This penny stock has soared by 49% in 12 months -- but still sells for far less than the sum…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

MHA is a UK stock market success story that deserves your attention

MHA listed on the UK’s stock market in April and has performed extremely well. Dr James Fox explains why the…

Read more »

A senior man using hiking poles, on a hike on a coastal path along the coastline of Cornwall.
Investing Articles

£20,000 in savings? Here’s how a Stocks and Shares ISA could generate £621 a month of passive income – tax-free!

Christopher Ruane explains how a Stocks and Shares ISA could potentially generate sizeable long-term passive income streams from proven businesses.

Read more »

A rear view of a female in a bright yellow coat walking along the historic street known as The Shambles in York, UK which is a popular tourist destination in this Yorkshire city.
Investing Articles

Up 269% in 5 years, could the Marks and Spencer share price go even higher?

Christopher Ruane explains some of the reasons the Marks and Spencer share price has boomed in recent years -- and…

Read more »