We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Despite ongoing quality issues at airplane manufacturer Boeing, sky-high oil prices, and supply chain issues, airline stocks are performing surprisingly well of late and deserve a second look from investors. Against all odds, the Zacks Transportation-Airline industry is a top 37% group (93 out of 251), and the U.S. Global Jets ETF, a proxy for airline stocks, is up an impressive32% over the past six months, far outpacing the S&P 500 Index.
Often, stocks tend to turn long before it’s obvious that the underlying industry has turned. As Wayne Gretzky says, “Skate to where the puck is going not to where it has been.” Below are three ways to play a potential turn in the airline industry.
Boeing
The global airline manufacturing market is dominated by to major players: Netherlands-based Airbus and Boeing. Boeing has been the premier manufacturer of commercial jetliners for decades. However, recently the company’s reputation has taken a significant hit due to ongoing safety issues with its aircrafts.
Duopoly & Backlog
Supply chain issues and safety concerns have led to a significant slowdown in Boeing’s deliveries. Nevertheless, the company is working to repair its reputation by naming a new CEO for its commercial airplane division. Regardless of Boeing’s safety issues, it’s important to understand that clients only have a choice between Airbus and Boeing, and many have already inked deals with Boeing. In fact, Boeing currently has a massive backlog of $520 billion! In other words, if the company can clean up its safety concerns, earnings will explode.
Rallying Despite Negative News
Last week, credit rating agency Moody’s slashed Boeing’s credit rating to Baa3. However, investors should pay attention to a stock’s reaction to news rather than the news itself. Since the downgrade, the stock is up ~10%, evidence that the bad news may have already been baked into shares.
Expected to Swing Back to Profit in 2024
Investors should never view fundamentals in a vacuum. For example, Carvana is up more than 1,500% over the past year because its fundamentals went from near-bankruptcy to strong. Boeing is an example of a similar turnaround play. After five years of deep losses, analysts expect BA to swing to a profit in 2024.
United Airlines
Rising Demand
Earlier this month, UAL shares exploded by 17% on volume turnover which was five times the norm after reporting earnings. Revenues increased nearly 20% year-over-year, aided by an uptick in air-travel demand.
New Destinations
Beyond renewed post-Covid travel demand, the airline is benefitting from the addition of six new destinations in a partnership with Brazilian Airline Azul.
Positive EPS Surprise History
Despite the volatility in airline industry conditions, UAL has bested Zacks Consensus Estimates for seven straight quarters, including a 71% positive surprise in the most recent quarter.
Delta Airlines
Modern Fleet with Airbus
Unlike many airlines, Delta is not reliant on Boeing filling its massive backlog. The company has a modern fleet and inked a deal to buy 20 Airbus wide jets. The Airbus planes offer fuel efficiency and greater cargo capabilities than many of its current planes.
Strong Earnings Despite Higher Oil Prices
Last quarter, DAL earnings increased by a healthy 42% in the wake of higher energy prices. If energy prices continue to decline, earnings should explode.
Bottom Line
The airline industry is flourishing despite a plethora of industry challenges. Three airline-related stocks offer great reward-to-risk zones.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Investment Ideas feature highlights: Boeing, Airbus, United Airlines, Airline Azul and Delta Airlines
For Immediate Release
Chicago, IL – May 3, 2024 – Today, Zacks Investment Ideas feature highlights Boeing (BA - Free Report) , Airbus (EADSY - Free Report) , United Airlines (UAL - Free Report) , Airline Azul (AZUL - Free Report) and Delta Airlines (DAL - Free Report) .
Airline Stocks Fly High: Buy These 3
Despite ongoing quality issues at airplane manufacturer Boeing, sky-high oil prices, and supply chain issues, airline stocks are performing surprisingly well of late and deserve a second look from investors. Against all odds, the Zacks Transportation-Airline industry is a top 37% group (93 out of 251), and the U.S. Global Jets ETF, a proxy for airline stocks, is up an impressive32% over the past six months, far outpacing the S&P 500 Index.
Often, stocks tend to turn long before it’s obvious that the underlying industry has turned. As Wayne Gretzky says, “Skate to where the puck is going not to where it has been.” Below are three ways to play a potential turn in the airline industry.
Boeing
The global airline manufacturing market is dominated by to major players: Netherlands-based Airbus and Boeing. Boeing has been the premier manufacturer of commercial jetliners for decades. However, recently the company’s reputation has taken a significant hit due to ongoing safety issues with its aircrafts.
Duopoly & Backlog
Supply chain issues and safety concerns have led to a significant slowdown in Boeing’s deliveries. Nevertheless, the company is working to repair its reputation by naming a new CEO for its commercial airplane division. Regardless of Boeing’s safety issues, it’s important to understand that clients only have a choice between Airbus and Boeing, and many have already inked deals with Boeing. In fact, Boeing currently has a massive backlog of $520 billion! In other words, if the company can clean up its safety concerns, earnings will explode.
Rallying Despite Negative News
Last week, credit rating agency Moody’s slashed Boeing’s credit rating to Baa3. However, investors should pay attention to a stock’s reaction to news rather than the news itself. Since the downgrade, the stock is up ~10%, evidence that the bad news may have already been baked into shares.
Expected to Swing Back to Profit in 2024
Investors should never view fundamentals in a vacuum. For example, Carvana is up more than 1,500% over the past year because its fundamentals went from near-bankruptcy to strong. Boeing is an example of a similar turnaround play. After five years of deep losses, analysts expect BA to swing to a profit in 2024.
United Airlines
Rising Demand
Earlier this month, UAL shares exploded by 17% on volume turnover which was five times the norm after reporting earnings. Revenues increased nearly 20% year-over-year, aided by an uptick in air-travel demand.
New Destinations
Beyond renewed post-Covid travel demand, the airline is benefitting from the addition of six new destinations in a partnership with Brazilian Airline Azul.
Positive EPS Surprise History
Despite the volatility in airline industry conditions, UAL has bested Zacks Consensus Estimates for seven straight quarters, including a 71% positive surprise in the most recent quarter.
Delta Airlines
Modern Fleet with Airbus
Unlike many airlines, Delta is not reliant on Boeing filling its massive backlog. The company has a modern fleet and inked a deal to buy 20 Airbus wide jets. The Airbus planes offer fuel efficiency and greater cargo capabilities than many of its current planes.
Strong Earnings Despite Higher Oil Prices
Last quarter, DAL earnings increased by a healthy 42% in the wake of higher energy prices. If energy prices continue to decline, earnings should explode.
Bottom Line
The airline industry is flourishing despite a plethora of industry challenges. Three airline-related stocks offer great reward-to-risk zones.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.