The airline sector of the stock market has been all over the place this year. Some stocks have been great performers, while other airline stocks have been in the doldrums. One investment analyst from the firm Macquarie Capital believes that two previously under-performing stocks will now outperform the overall market.
This year, the airline investment story has centered around which airlines have the most exposure to the grounding of the Boeing 737 MAX. Delta Airlines(DAL) has seen its stock price rise by more than 20 percentage points this year. This company has had strong quarterly earnings reports, and Delta has not been harmed by what is occurring with the Boeing 737 MAX.
American Airlines(AAL), has seen its share price tumble. This airline has had poor quarterly earnings reports, and the airline is still struggling with debt. American is facing problems due to the Boeing 737 MAX grounding.
Spirit Airlines(SAVE) is having a down year in the market this year. Its price is off approximately one-third. Southwest Airlines(LUV) started the year on the wrong foot, but the stock has now turned around and is in the black.
Analyst Susan Donofrio of Macquarie is now raising her rating on both Spirit Airlines and Southwest to outperform. Ms. Donofrio believes that Southwest has its problems under control, and she believes that this airline will continue to increase its share price. She now believes that Southwest will reach $67 per share. She believes that Spirit Airlines has fallen so far that it is attractive to investors. Ms. Donofrio has set a target of $47 on Spirit.
These are not the only stocks favored by Ms. Donofrio and Macquarie. She continues to recommend United Airlines(UAL), Delta Airlines and Allegiant Airlines(ALGT). She is particularly bullish on Allegiant because this carrier does not have another airline competing with it on almost three-fourths of its routes.
Dil Bole Oberoi
