10 Best Airline Stocks to Buy According to Hedge Funds

6. Copa Holdings, S.A. (NYSE:CPA)

Number of Hedge Fund Holders: 24

Copa Holdings, S.A. (NYSE:CPA) is a publicly traded airline passenger and cargo service company. It owns two airlines: Copa Airlines, which provides international air transportation through its hub in Panama City, and Copa Airlines Colombia, which operates domestic and international flights from various cities in Colombia.

According to Insider Monkey’s database for Q2 2024, 24 hedge funds held stakes in the company, making it one of the best airline stocks to buy according to hedge funds. Renaissance Technologies is the biggest investor in the company, among those tracked by Insider Monkey, with its holding valued at $82.99 million as of June 30, 2024.

The company reported robust results during the second quarter of 2024, earning a net profit of $120.3 million, with EPS logged at $2.88. Its operating margin stood at 19.5%, making it the second-best quarter in the airline’s history. The strong performance was driven by a 10.6% increase in passenger traffic from the same period last year. Capacity increased by 9.7% during the quarter, resulting in a 0.7% increase in load factor, which now stands at 86.8%.

Another metric that paints a promising picture of the company is the 5.8% year-over-year decline in cost per average seat mile, driven by lower sales and distribution charges and reduced aircraft maintenance costs. Low sales and distribution costs were attributed to most passengers directly booking their flights from Copa Holdings, S.A. (NYSE:CPA), instead of third-party channels. Customers also increasingly utilize the low-cost NDC travel agency channel.

Looking ahead, the airline is aiming to ramp up its capacity between September and December to reach full capacity by the end of the year. It has also reaffirmed its operating margin for the full year 2024 to be in the range of 21% to 23%. This has led to a bullish sentiment around the stock. Wall Street analysts have consensus on the stock’s Strong Buy rating and anticipate a near 49% upside potential, on average, in its share price.

The company does face a challenge emanating from the suspension of flight operations to Venezuela which is likely to affect its capacity and unit revenue guidance. However, the overall outlook for the company remains positive.