Jet2 PLC (AIM:JET2) may not be everyone’s first thought when talking about defensive stocks. And let's be honest, it probably isn't.
However, JP Morgan thinks the budget airline and package holiday group is exactly the kind of business that could quietly outperform in the current climate, especially after a bruising sell-off.
The bank has initiated coverage on the company with an 'overweight' rating, calling the recent 20% fall in the share price a “good entry point” for long-term investors.
Jet2, it says, combines strong cash generation, a loyal customer base and a business model that’s better balanced than many of its rivals. Crucially, the group still holds net cash, a rarity in the sector.
The budget airline and holiday firm trades on just six times earnings, with a free cash flow yield of 20%, putting it at the cheaper end of European low-cost carriers.
The American bank reckons that’s too low for a company it describes as having “defensive tilt”, particularly in a downturn.
Its analysts see scope for margin improvement, stronger per-passenger profitability, and rising shareholder returns - all backed by an improving competitive landscape in the UK short-haul market.
On top of that, the bank points to the group’s track record of turning growth into profit, and profit into cash.
Jet2’s “secret sauce”, according to the note, lies in its customer-first approach, something that has helped it grow steadily without the brand baggage or overexpansion risks faced by some peers.
The company issued a profit warning earlier this year, tied to rising costs and broader tariff concerns that have weighed on the travel sector.
But JP Morgan argues that’s now in the price, and sees around 50% upside to its December 2026 price target of 1,900p.
In a market growing wary of volatility, Jet2 might just be offering investors an attractive package deal.
In a down market, the stock was up 1.7% at 1,335p.