Opinions
Mike S. Newton, CIM FCSI
US Global Jets
JETS-N
COMMENT
Dec 09, 2015
Stock price when the opinion was issued
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An Airline ETF Recommendation. It is a bottom picking exercise. You have a significant drawdown on these stocks and they had a marginal recovery. He would suggest JETS-N as the purest play. IYT-T is a transportation ETF. Don't rush into it. It might be better to wait until this ETF improves in its price. Wait for it to get to $20.
Airline stocks are high beta, very volatile. Travel numbers are getting back to pre-pandemic levels. To mitigate single-name risk, you could look at the JETS etf, with 70% of names in the US. If you're OK with the volatility, this is a good medium-longer term investment.
Was sideways this year, but since lows of early August, this has rallied 53%, an amazing run. The airlines are a trade, not an investment, and it's time to take some profits. That said, leisure travel is hanging in while business travel is finally returning. Domestic airline capacity has stopped increasing as much as in previous years: 6.3% capacity growth for 2024 as estimated last January vs. 4.4% estimates for 2024 from last October. Boeing's strike and other woes didn't help the supply chain.
He is generally not a fan of airlines. This has a management fee of 60 basis points and was just launched by US Global Investors. It should be positioned well in this environment. You might also want to consider Copa Holdings (CPA-N). The industry is pretty cyclical, so you have to be very careful.