Opinions The Panic-Proof Portfolio (Stockchase Research)
Delta Air Lines IncDALTOP PICKJul 16, 2024
Stock price when the opinion was issued
As of Sep 04, 2026. Market Open.
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Premium contentOur PAST TOP PICK with DAL has triggered its stop at $82. To remain disciplined, we recommend covering the position at this time. When combined with previous guidance, this will result in a net investment loss of 4%.
Premium contentWe reiterate DAL as a TOP PICK. Consumer demand is rising -- and not just for economy seats, premium as well -- as customers look for greater experiences. The company is rumoured to be in discussions with a United regarding a possible merger. It trades at 9x earnings and supports a 20% ROE. We recommend trailing up the stop (from $76) to $82, looking to achieve $109 -- upside potential of 18%. Yield 0.7%
(Analysts’ price target is $107.93)Premium contentFollowing the recent dividend increase, we reiterate DAL as a TOP PICK. Management is confident dividend growth is sustainable as quarterly cash flows increase, while debt is reduced. The recent dividend boost of 15% is backed by a payout ratio under 20% of cash flow. It trades at 17x earnings, 3x book and supports a ROE of 20%. We recommend trailing up the stop (from $69) to $76, looking to achieve $110 -- upside potential of 18%. Yield 0.8%
(Analysts’ price target is $107.00)Has long-term legs. Earnings estimates are flat, shares are up, but it's overbought, though nothing is wrong with the fundamentals.
Jim LebenthalDelta and United are a duopoly. That's why both shares are up this year. UAL us up 22% this year.
Joe TerranovaPremium contentPremium contentWith recent quarterly earnings showing an increase in cash reserves and reduction in debt, we reiterate DAL as a TOP PICK. The airline has successfully managed rising fuel costs, while expanding margins amid rising global air travel demand. It trades at 15x earnings, 2.6x book and supports a 20% ROE. We recommend trailing up the stop (from $56) to $62, looking to achieve $94 -- upside potential of 18%. Yield 0.9%
(Analysts’ price target is $83.47)The fundamentals are not good given fuel costs soaring because of the war. Earnings have gone from +20% to -6%, but shares are up because DAL has its own oil refinery. DAL hit all-time highs last week.
Teal Linde
Premium contentThe international air carrier announced plans to add 31 wide body jets to expand its international foot print into larger margin destinations. It trades at 9x earnings, 2.2x book and supports a ROE of 27%. We like that cash reserves are growing, while debt is retired. We recommend setting a stop-loss at $56, looking to achieve $84 -- upside potential of 19%. Yield 1.0%
(Analysts’ price target is $84.19)The average valuation is 9X earnings before the pandemic and it is now trading at 9X next year's expected earnings. Other stocks and the S&P are getting more expensive so Delta's valuation should be higher.
Teal LindeAnything tied to debt is rallying in the face of interest rate cuts. DAL has been reducing debt, but there's still a lot. Airline traffic remains robust in the US. DAL is very attractive now.
Jim LebenthalAirlines are always tough investments. Valuation is certainly cheap. EPS is expected to dip this year and then rise 20% in 2026. However this assumes no recession or other issues. The Q1 was decent and 19% ahead of estimates. The dividend was recently increased 25% (for the Q3). If we see Middle East peace and lower oil prices the stock may start acting better. As a 'value' stock we think it is OK. It has the usual sector and market risks, and we would not see it as a huge secular growth name. But......under the right conditions we could see an 11X mutliple or more, and this would be a good gain if it occurred. But note it's current multiple is not really out of line by historical standards.
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We again reiterate DAL as a TOP PICK. Fitch just upgraded their credit rating back to investment grade, commenting their metrics have improved considerably after the pandemic. The company has reduced gross debt aggressively and downsized its leases by $11 billion over the past three years. It trades at 7x earnings, 2.2x book and supports a robust 43% ROE. We continue to recommend maintaining a tight stop at $43, looking to achieve $61 -- upside potential of 31%. Yield 1.4%
(Analysts’ price target is $61.32)