Opinions
The Panic-Proof Portfolio (Stockchase Research)
Alaska Air Group
ALK-N
TOP PICK
Jan 25, 2024
Stock price when the opinion was issued
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We reiterate ALK as a TOP PICK. The company expects its acquisition of Hawaiian to close in the next 18 months and they expect to see large cost-saving synergies. Quarterly cash reserves are growing, while debt is retired and shares bought back. It trades at 21x earnings and 1.2x book value. We recommend trailing up the stop (from $31) to $33, looking to achieve $51 -- upside potential of 31%. Yield 0%
(Analysts’ price target is $51.10)We reiterate ALK as a TOP PICK. Travel demand is strong and the company is performing well. It trades at 23x earnings and under 2x book value. Cash reserves are growing while debt is retired and shares bought back. We recommend trailing up the stop (from $33) to $38, looking to achieve $56 -- upside potential of 28%. Yield 0%
(Analysts’ price target is $56.56)We again reiterate ALK as a TOP PICK. Following a grounding of one-third of their fleet due to Boeing related issues, the company has since been compensated $160 million by the aircraft manufacturer. Air travel is hitting all time record highs and ALK is well positioned. It trades at 22x earnings and 1.3x book value. We will continue to recommend a tight stop at $38, looking to achieve $56 -- upside potential of 34%. Yield 0%
(Analysts’ price target is $56.40)Our PAST TOP PICK with ALK has triggered its stop at $38. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 5%, when combined with our previous recommendations.
ALK has estimated the grounding by Boeing of its Max 9 fleet will likely hinder some of its capacity for a while. For this the market clipped its share price by 20%, but now it is recovering following recently released earnings. The company is reporting expanding margins in both passenger and cargo. It trades at only 1.1x book and 13x earnings. Quarterly cash reserves are growing as debt is retired and shares bought back. We recommend setting a stop-loss at $31, looking to achieve $51 -- upside potential of 36%. Yield 0%
(Analysts’ price target is $51.50)