In this article, we look at IAG, Rolls-Royce, and Ibstock as three shares that could warrant being added to a watchlist following recent market volatility stemming from the war in the Middle East.
IAG
IAG is an obvious choice. The airline was hit by concerns about grounded flights and rising oil prices, and followed the well-trodden path of airline shares sinking as geopolitical tensions turn into full-blown wars.
As fears about a prolonged war that could cause an oil shock subside, investors may shift their focus back to IAG’s record 2025 performance, which saw revenue grow 3.5% to €33,213 million and operating profit increase to more than €5 billion.
Notwithstanding the blip caused by the ongoing conflict in the Middle East, IAG is enjoying a period of growing travel demand and is simultaneously securing more revenue per passenger.
The company recently announced an additional €1.5 billion return to shareholders, as free cash flow remained above €3 billion in 2025.
IAG shares trade at just 5.9x historical price-to-earnings, which may prove to be ludicrously low.
Rolls-Royce
The dip in Rolls-Royce shares could be a rare opportunity to pick that shares on weakness amid a multi-year bull run that has seen shares rally more than 1,000% from 2022 lows.
There was a period last year when Rolls-Royce started to look a little rich on a valuation basis. Shares powered on regardless.
Full-year results for 2025, released at the end of February, went a long way toward justifying this rally, but profits for the period still left the company trading at above-average multiples.
The story here, however, is one of future growth, and it’s refreshing to see the UK market willing to price in a large company’s growth more than one year ahead.
Rolls-Royce has provided mid-term targets of £4.9bn-£5.2bn, which appear well within reach for a company consistently delivering on its promises.
The aerospace division continues to be the driving force, but the power business is certainly becoming an interesting contributor to the group.
Ibstock
Ibstock is a selection for those optimistic about the UK economy. As hard as this may have been with the Labour government manufacturing the decline of the UK economy prior to the conflict, being optimistic about the economy has become a whole lot harder with the threat of interest rate hikes in the coming months.
Ibstock shares sank like a stone last week as rising oil prices rocked the UK property sector amid growing fears of higher mortgage rates and slower demand.
As the UK’s leading brick-maker, Ibstock shares lost about 25% of their value last week alone. Shares are now 50% lower than the 52-week high.
But does the war in the Middle East really alter the long-term structural demand for bricks and the underlying requirement for the UK to build more houses? Probably not.
Disconnections in markets can create opportunities for investors, and that appears to be what’s happening with Ibstock shares currently.
Looking beyond this year and two to three years in the future, demand brick is likely to return and filter through Ibstock’s earnings.