The airline industry has recently received extensive press with the Boeing 737 Max crash and subsequent grounding of crafts. There are also concerns over the cost competition brought about by low-cost carriers. Furthermore, they can be vulnerable to oil price and geopolitical events.
CNBC was reporting a few weeks ago (in April) that analysts predicted Airline stocks could still rally another 20% this year.
In the long-term, analysts expect millennials who value experience to help bolster the airline industry.
Westjet Airlines (WJA-T)
Onex put a bid in to acquire the carrier, and regulators should approve the deal. They have been coming out with better numbers and guidance in the last quarter.
His model price is $27.69, 46% higher than the current price, but the stock’s technicals are giving a sell signal and the earnings estimates have been crashing. Since 2010, the stock has hit this level three times and done fantastically after that. He would buy a little bit here but would not buy more until…
Air Canada (AC-T)
The largest airline in Canada. A well run company. They are in exclusive talks to buy Air Transat since May of this year. They experienced some problems with the Boeing 737 issue.
Like the railroads in the '90s, the airlines are getting cleaned up. Unions are now onside with what is going on. He likes it. It just broke out. He would not get a full position here. If it pulls back, then buy more. It is now one of the better airline stocks. He likes it…
Chorus Aviation Inc (CHR-T)
They operate Air Canada Jazz. The new agreement with them will run for 17 years. They pay a good dividend and are doing very well with a big profit margin.
Transat .A. T. Inc (TRZ.A-T)
Transat is in exclusive acquisition talks with Air Canada and the outlook is very positive.
*SHORT* (Pairs trade with a Long on Air Canada (AC-T). This has razor thin margins, so any little hiccup can throw them into losses. Last quarter there was warm weather, the currency, a threat of pilot strikes, Zika mosquitoes. Had very ugly Q1 numbers. Management indicated Q2 was going to be ugly as well. Everyone…
Canada Jetlines Ltd (JET-X)
A Canadian ultra low-cost airline out of Vancouver that is just getting off the ground. They recently announced that they successfully launched their system for ticket sales.
This is an ultra-low cost airline. The airlines have been doing very well recently. The chart shows the company is transitioning from one kind of company to another at around mid-December. He likes very-low-price companies but would be cautious about how much he would invest. Not more than 3% of his portfolio. He would expect…
Southwest Airlines (LUV-N)
The world’s largest low-cost carrier. They pay a good dividend. They are moving into more longer range flights and moving out of their traditional shorter range flights.
One of the best run companies in the US. Earnings have come under pressure from competition and higher fuel costs. If earnings were normalized, the P/E would be in the mid teens.
American Airlines Group (AAL-Q)
Price competition has been tough for American Airlines and the stock price has been volatile. They recently extended their 737 MAX fllight cancellation period.
Feels there is a trading catalyst to own an airline here. There has been some consolidation in this space. Traditionally these are not well run businesses but there is less capacity now, fuel is moving up and surcharges can be passed on. If they can manage those earnings and can guide the street conservatively, a…
Spirit Airlines Inc. (SAVE-N)
An ultra-low-cost carrier from Florida. They are 7th in the commercial airline sector in the US. Low fuel costs have improved the bottom line significantly. They are anticipating a capacity growth of 13% in 2019, year-to-year.
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.
Delta Air Lines Inc (DAL-N)
The company is doing well and ordering premium economy seats that will boost revenue. They have good free cash flow too. The company intends to continue buying back shares and raising dividends.
Boeing (BA-N) or Delta (DAL-N)? This just rebounded off a beautiful price low at 2X Book. The stock is cheap. Its FMV is 85% higher than the current price. He would buy this and forget Boeing.
United Continental Holdings (UAL-N)
An airline holding company that owns and operates United Airlines. Their earnings are growing and revenues per available seat mile is also up 4.3% since last year.
Airline stocks have a tendency to be volatile. There is some seasonality in the spring time and you get a time in the summer when the stock does well. Looking at the charts, he does not see a seasonal pattern. Technically the chart shows it is forming a nice little base and is in a…
Stock prices have been struggling since the 737 Max crash. They are trading at 23x forward earning which is considered quite expensive. However, they are in a duopoly and demand for transport is strong. It will not go up in the short-term but worth holding.
The crash of their 737 in Indonesia hit the stock today. Stay low and wait--see what the aviation findings are. If it turns out that their aircraft are in trouble, this stock will fall further.
JetBlue Airways Corp. (JBLU-Q)
An American low-cost carrier and the 6th largest in the US. The company hopes to double earnings by 2020. They are in the final stages of their program to cut costs in maintenance and airline staff.
The will get tax relief from the election. For decades airlines were hated businesses because they were so competitive. Now the top 4 airlines represent 91% of the industry in the US. They are almost an oligopoly. They now have pricing power. (Analysts’ target: $22.42)
Skywest Inc (SKYW-Q)
A holding company that operates SkyWest Airlines and ExpressJet. Their cash outlook is great and are considered undervalued right now.
A European aerospace corporation. They have a backlog of orders and China seems to favor Airbus over Boeing. They bought the CSeries program from Bombardier last year that should create more lightweight planes.
This is a recent acquisition. The backlog of orders for Boeing and Airbus is tremendous. He thinks China will favor Airbus over Boeing in future orders. He thinks the Bombardier acquisition gives them an advantage over Boeing across the fleet. They are also setting up a new maintenance service, which might take over work currently…