Stockchase Opinions

Jason Del Vicario American Airlines Group AAL-Q DON'T BUY Jan 21, 2022

Airlines traditionally not a good investment (require a lot of capital and don't return much equity). Would not recommend as a long term investment. Don't buy.
$16.300

Stock price when the opinion was issued

Transportation
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DON'T BUY
He's never owned an airline in his career. Way too cyclical, capital intensive. When they lose, they lose big. All are in worse shape than before the pandemic. They've had to issue a ton of high-cost debt and more shares. Who knows what will happen with travel? Long-term chart has been a disaster. A trade at best.
PARTIAL BUY
Last Thursday, AA forecast they'll return to 93% of pre-Covid capacity this quarter with total revenue up 6-8% compared to 2019--better than pre-Covid. Won't say when they will return to profitability. Are cleaning up the balance sheet and spending to increase capacity. He prefers Delta and United, but likes AA.
DON'T BUY
It's losing money, so no. Delta is the best in this group.
COMMENT
AA issued profit expectations that are lower than the street's

Not worried, because AA actually increased their estimates last month. The problem is that street's estimates got ahead of itself.

BUY ON WEAKNESS

Travel industry recovering after Covid-19 pandemic. 
Sales stronger than the past few years.
Would wait to buy shares in October.
Seasonality - not a great time to buy shares.

HOLD

He prefers Delta, but he likes airlines, a business which is in flux. AAL shares are not expensive.

DON'T BUY

He can't recommend the airlines now. Fuel costs are too high.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly

Pent up traveler demand allowed AAL recently reported earnings to almost quadruple expectations - topping expectations for six consecutive quarters.  It trades at 12x and cash reserves are growing again as debt is aggressively retired.  We recommend setting a stop-loss at $13, looking to achieve $17 -- upside potential of 21%.  Yield 0%    

(Analysts’ price target is $16.93)
premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly

We reiterate AAL following the recent release of earnings, which showed cash reserves growing, while debt  is aggressively retired.  Analysts expect EPS growth this upcoming year of 180% as travel demand continues to grow.  We continue to recommend a stop at $13.00, looking to achieve $17.50 -- upside potential of 18%.  Yield 0%

(Analysts’ price target is $17.50)
premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick May 09/24, Down 10.9%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with AAL has triggered its stop at $13.  To remain disciplined we recommend covering the position at this time.  This will result in a net investment loss of 10%, when combined with our previous buy recommendation.