The Saga share price has surged 120% in 3 months! Should I buy the shares now?

first_imgThe Saga share price has surged 120% in 3 months! Should I buy the shares now? Over the last four years, the Saga (LSE:SAGA) share price has behaved like a rollercoaster that’s ultimately falling. The over-50s travel and insurance business saw its share price continue to fall to a record low of around £1.20 last year from a high of £30+ four years ago.What caused this 96% decline? And should I buy shares at today’s low price? Let’s take a look.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…What caused the Saga share price to plummet?Saga’s share price started falling near the end of 2017 after the firm declared a one-time marketing expense of £10m, dubbed as a “customer acquisition spend”.At the time, increasing the marketing budget appeared odd. The Saga brand was already well known, and this additional cost would lower the following year’s profit by 5%.This decision seems to have been the first indicator that something was wrong. And at the end of 2018, the problems started to reveal themselves. Both the insurance and over-50s travel segments of the business were losing customers. Fast. And when investors demanded an explanation, the management team admitted it had been “overly focused on the short term”.The announcement of a £310m non-cash impairment charge only added fuel to the fire. The previously profitable business transformed into a money-loser. Dividends were cut in half, and the Saga share price continued to plummet.After four years of terrible decisions, CEO Lance Batchelor was ousted from his position in January 2020. And just as the firm began to set itself back on course, the pandemic hit. With no passengers aboard its cruise ships, the company made a record loss of £313m in 2020. And so once again, the share price tumbled.Saga’s rescuerTowards the end of 2020, Saga looked like it could go under. With piles of debt building up and no income to cover the bills, the business needed to raise money quickly. With debt financing at capacity, it turned to investors to raise £150m through an equity offering.But wait. What’s that coming over the hill? Is it a bird? Is it a plane? No, it’s a knighted Englishman with £100m!Sir Roger De Haan, the previous owner of Saga 16 year ago, came in and bought a big chunk of the issued shares. He now owns approximately 20% of the business and sits as the board’s non-executive chairman for the next three years.Will the Saga share price make a 2021 comeback?The newly raised capital allowed the firm to restructure and bring its short-term debts under control. And the share price has climbed 120% since the rescue package arrived.But the company has a long way to go. In my opinion, the recovery of the Saga share price is directly linked to the return of its cruise line operations. Fortunately, as I’ve previously discussed, the cruise industry has some of the highest customer loyalty levels of any sector. As such, 65% of Saga’s customers haven’t requested a refund, and intend to go on their trips as soon the ships set sail again.If trips can resume in the second half of 2021, I think Saga will finally be back on course. And with new management at the helm, that makes it a business I’d consider adding to my portfolio. Simply click below to discover how you can take advantage of this. Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” See all posts by Zaven Boyrazian Zaven Boyrazian does not own shares in Saga. 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.center_img 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 Zaven Boyrazian | Friday, 22nd January, 2021 | More on: SAGA Our 6 ‘Best Buys Now’ Shares 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.last_img read more