10 Best Airline Stocks to Buy According to Hedge Funds

2. Delta Air Lines, Inc. (NYSE:DAL)

Number of Hedge Fund Holders: 51

Delta Air Lines, Inc. (NYSE:DAL) is a major American airline, headquartered in Atlanta, Georgia. It is the oldest operating airline in the United States, with its first passenger flight taking off nearly a century ago in 1929. The air carrier operates more than 4,000 daily flights to 275 destinations, across six continents.

The company announced its September quarter results on October 10. Delta Air Lines generated earnings of $971 million during the quarter, down 26% from $1.31 billion last year. As a result, its EPS of $1.50 fell short of expectations of $1.52 per share. The dip in earnings was significantly affected by the CrowdStrike-caused outage which resulted in direct losses of $380 million, primarily driven by canceled flights. It also incurred an additional $170 million in customer expense reimbursements and crew-related costs.

However, the airline is confident about finishing the year strong and anticipates a return to year-over-year earnings growth in the fourth quarter, driven by continued demand for its premium offerings. Delta Air Lines is also seeing healthy bookings for Thanksgiving and Christmas holidays, increasing the optimism for improved results.

The company expects total revenue during Q4 to grow 2% to 4% compared to 2023, aided by a 4% higher capacity level. EPS for the December quarter is forecast to be $1.60 to $1.85 per share on 11% to 13% operating margins. Guidance for Q4 takes into account a 20% expected decrease in fuel prices to hover in the range of $2.20 to $2.40 per gallon, which is likely to help earnings. A brief drop in travel spending around the presidential elections in November is also part of the forecast.

The overall sentiment around the stock is bullish as international travel recovers to pre-pandemic levels, and the holiday season coming ahead. Wall Street analysts have consensus on Delta Air Lines, Inc. (NYSE:DAL)’s Strong Buy rating and anticipate a 17% uptick, on average, in its share price. It is also one of the best airline stocks to buy according to hedge funds. According to Insider Monkey’s database, 51 hedge funds tracked by the financial website held a stake in the airline, as of Q2 2024.