1. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 56
United Airlines Holdings, Inc. (NASDAQ:UAL) is a publicly traded company that owns and operates United Airlines, one of the leading carriers across the Atlantic and Pacific. The airline flies around 140 million passengers annually to over 300 destinations across six continents.
On October 15, the company reported robust results for the year’s third quarter. Top-line revenue reached $14.8 billion, expanding 2.5%, driven by a 4.1% increase in capacity and declining fuel prices. Despite setbacks from the CrowdStrike outage and suspension of flights to Aman and Tel Aviv amid the turmoil in the Middle East, net income for Q3 stood at $965 million, translating to earnings per share of $3.33 which beat analysts’ forecasts and United’s estimates made in July.
United Airlines shares have risen nearly 16% since the announcement of Q3 results. The closing price of $72.02 on October 16 was the highest since February 2020, before coronavirus was declared a pandemic. After higher-than-anticipated earnings during the quarter, the company’s board of directors approved a $1.5 billion share repurchase program to be executed beginning in Q4 and throughout 2025.
This would be the first share buyback program after Covid-19. The decision has been slammed by United’s flight attendants’ union. The Association of Flight Attendants-CWA (AFA), which represents crews of several carriers including United, stated that the money promised to Wall Street belonged to flight attendants who worked on the frontlines during the pandemic and the recovery period that followed.
The airline has been continuously facing labor pressures for some time. In August, it entered negotiations with the Teamsters union which is pushing for new labor contracts covering 10,000 aviation maintenance and related workers across the country, seeking higher wages, improved healthcare benefits, and safety standards.
However, despite these challenges, United’s prospects look promising. It has already entered Q4 at the back of strong momentum across the Atlantic having exited Q3 with RASM growth of over 4%. The company witnessed strong corporate demand across all regions in September and expects it to continue in the fourth quarter. EPS for Q4 is anticipated to be in the range of $2.50 to $3.00.
Wall Street analysts have consensus on United Airlines Holdings, Inc. (NASDAQ:UAL)’s Strong Buy rating, with an average share price upside potential of 6.38%. Hedge fund sentiment also continues to improve. The number of hedge fund holders having investments in the company has grown from 46 at the end of Q1 to 56 as of Q2, according to Insider Monkey’s database. United Airlines is currently the best airline stock to buy according to hedge funds.
Overall, UAL ranks first among the 10 Best Airline Stocks to Buy According to Hegde Funds. While we acknowledge the potential of airline companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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