Opinions
Gordon Reid
Spirit Airlines Inc.
SAVE-N
BUY
Jan 21, 2016
Stock price when the opinion was issued
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Airlines are trading at very low multiples compared to other transportation. It is dirt cheap. An ultra low cost carrier. Flies to major domestic cities. Best margin in the business. It is not a business travelers` airline. They do 13% more flights per day with their planes than other carriers.
There are a few technical issues you need to watch out for in trading. Many people are down 50%. There is a behavioural pattern where people say that if it just rallies back to the next resistance point, they are going to get out. However, it never quite gets there because everybody is doing the very same thing. You are fighting a tide, and it is a big tide. Just recognize that this is one that didn’t work out for you, and drive on.
(A Top Pick March 23/15. Down 37.65%.) Had thought this would do better. It had the benefit of very low oil prices at that time, and was an ultra low cost carrier, which was attractive, and it was winning share. Started to have problems operationally. It is going to take time to repair some of the reputational damage. As oil prices came up, he exited his position.
spirit airlines (nasdaq: save) is the ultra-low cost airline of the americas and home of the bare fare. spirit’s fares are unbundled; they simply reflect the cost of taking customers to their destination without any extras. every customer gets frill control: the ability to choose what perks and options they’d like to add to the bare fare, independent of the choices of other passengers. structuring fares this way allows every passenger a chance to fly for less than any other airline. spirit’s fit fleet is one of the youngest flying and is one of the most fuel-efficient in the industry. this innovative approach grows the traveling market and stimulates new economic activity while creating new jobs. spirit currently operates more than 250 daily flights to over 50 destinations within the u.s., latin america, caribbean and canada. for more information, head to spirit.com. media note: spirit aircraft photos and video b-roll are available in the pressroom section of spirit.com at spirit.com Social media mentions are up 500% in the past 24h.
Airlines are slaves to fuel prices. We hear all the negatives to low oil prices, however dropping oil prices is a net positive to many industries like this one. It is a decent place to look but it is a trade because it is tied to the commodity.