The 2 Best Airline Stocks you can Buy
Delta Air Lines (DAL) kick started the airlines earnings season with a bang. The company shared record profits and beat the analysts’ estimates on earnings as well as revenue. Hawaiian Airlines (HA) also reported record profits and with many airlines stocks still to report earnings, let’s take a look at the best airline stocks that investors can still buy.
JetBlue, along with Volaris (VLRS), has been my favorite stock in the aviation sector.
JetBlue was recently hit by a downgrade at Morgan Stanley which pushed the stock down by almost 8%. The stock is currently trading at $24.68 and in my opinion, the airline possess at least 20% upside potential from these levels.
While the downgrade hit the stock hard, investors can use this opportunity to buy the stock on the pullback. JetBlue has managed to outperform the aviation industry as the carrier’s passenger unit revenue is expected to remain flat for the current quarter. By comparison, all other carriers have reported 4%-8% decline in passenger unit revenue. The company’s revenue growing initiatives like Mint and Even More have been well received among the fliers. JetBlue should witness sustainable growth as it expands its Mint and Even More services to different routes.
Cheap crude, along with smart expansion plans, should drive JetBlue’s shares higher, making the stock a screaming buy at present levels.
Like JetBlue, I have called Volaris a buy multiple times over the last few months, and the stock performance has been immense. Volaris is up over 50% since I first recommended buying it earlier in March.
The company has staged a stunning turnaround as its operating margins have turned positive thanks to cheaper crude. In addition, the company had earlier struggled due to the overcapacity in the Mexican aviation industry. However, Volaris has focused its attention on expanding into the international market, which has benefited the company a lot. With the company bent on its goal to expand its international capacity by roughly 33%, more growth in expected in the short to mid-term.
The company recently reported stunning Q3 numbers beating the consensus estimates on revenue as well as earnings. Volaris is aggressively trying to reduce unit cost and increase efficiency, and as long as crude prices are under $60 per barrel, stock will likely move higher.
JetBlue and Volaris have been my favorite aviation stocks in 2015. Both the companies have managed to dodge the negative sentiments surrounding the aviation industry and have outperformed their peers. Expansion and cheaper crude will increase profits, and I believe both the carriers have about 20% upside potential from these levels. Thus, I think both Volaris and JetBlue are good buys for the short to mid-term.