14 Airline Stocks Flying High in 2019
Airlines recently went through a string of consolidation with the most recent purchase of Westjet Airlines (WJA-T) and the acquisition proposal of Transat (TRZ.A-T) by Air Canada (AC-T).
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.
It’s under review by the government whether the takeover will take place. You’re dealing with regulatory uncertainty right now. If you bought it before the takeover, unless you’re in tune with what will happen, he wouldn’t own the stock any longer. The price is fair.
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.
They have gone bankrupt twice in the past. With airlines you must buy at the right time in the cycle and now is a good time to buy Air Canada with a 24% growth EPS. It now has a better balance sheet and is much cheaper than its U.S. peers. Margins should do better. Cost…
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.
(A Top Pick Mar 23/22, Down 24%) Acquisition looked accretive, but it hasn't unfolded as anticipated. A satellite position, rather than core. The name will work. Stick with it. Pick it up cheap, but don't run out to buy. Breakup value is $5.50.
Transat .A. T. Inc (TRZ.A-T)
Transat is in exclusive acquisition talks with Air Canada and the outlook is very positive.
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.
Want to wait for them to start flying, to see if they can do it. It’s not an easy business. Comes down to management. You might be OK, but there are easier ways to make money.
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.
Sure, there's a travel boom, but the airlines haven't fully benefit due to major unreliability problems. For example, LUV cancelled 16,000 flights over the holidays last year due to bad weather and technical issues. Just last week, technical problems led to nationwide delays. Pity, because LUV has long held a good reputation, and he likes…
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.
Travel industry recovering after Covid-19 pandemic. Sales stronger than the past few years.Would wait to buy shares in October.Seasonality - not a great time to buy shares.
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.
(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…
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.
Passenger counts are through the roof. Estimates for airline stocks keep rising, but they've gotten no love. He's bullish airlines.
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.
All airlines are cyclical but he thinks the time is particularly ripe with this one. Their earnings are growing. Revenue per available seat mile has grown 4.3% last year. They are 200 basis points ahead of all of the other airlines. The airlines are a good opportunity and this one is a particularly well managed…
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.
Oligopoly, it's BA and Airbus. BA has had a tumultuous couple of years. If the industry structure weren't so favourable, he's not sure BA would be around. Not sure it's out of the woods, seems there are perpetual overhangs. Look at RTX, an aerospace and defense company, or Airbus.
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.
Announced a hostile takeover of Spirit Airlines today. Really? Won't the Justice Department and Pres. Bidec nix this deal for being anti-competitive?
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 Top Pick Jan 18/22, Down 27.2%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with SKYW has triggered its stop at $30. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 31%, when combined with our previous buy recommendation.
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.
Allan Tong’s Discover Picks Still, there are some caveats: Airbus’ beta of 1.66 makes the stock vulnerable to sudden market downturns. The stock current trades at 28.3x PE, above its five-year average of 25.64x. Also, EADSY is trading within $2 of its 52-week high of $35.52 at levels not seen since January 2020. The ongoing…