1. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Investors: 51
Delta Air Lines, Inc. (NYSE:DAL) is the most popular airline stock among the 919 hedge funds tracked by Insider Monkey. A total of 51 hedge funds reported owning stakes in Delta Air Lines, Inc. (NYSE:DAL) as of the end of the March quarter. HSBC analyst Achal Kumar recently started covering the stock, along with three other major airliners, with a Buy rating. The analyst is bullish on the stocks amid strong demand.
Kumar thinks Delta Air Lines, Inc. (NYSE:DAL) is in the strongest position when compared to competitors like United Airlines and American Airlines, as the company owns 70% to 75% market share at its top six hubs.
Delta Air Lines, Inc. (NYSE:DAL) earnings are expected to grow by 10% in 2025. The stock is currently trading at 6.9x its 2025 EPS estimate. This forward P/E is lower than the sector median of 18.75.
Average Wall Street analyst price target for Delta Air Lines, Inc. (NYSE:DAL) is $61, which presents a 20% upside potential from the current levels. Being the top airline in the US, Delta Air Lines, Inc. (NYSE:DAL) is a clear beneficiary of the expected travel recovery in the next few years. Bain & Company expects annual air travel demand to exceed 2019 in 2024. Delta Air Lines, Inc. (NYSE:DAL) is the largest airline in the US in terms of domestic revenue.
Oakmark Fund stated the following regarding Delta Air Lines, Inc. (NYSE:DAL) in its first quarter 2024 investor letter:
“Delta Air Lines, Inc. (NYSE:DAL) is a leading global airline. Of the big three U.S.-based airlines (Delta, United and American), we see Delta as the most competitively advantaged. We believe the company’s years of industry-leading operational performance and investments in the customer experience have established Delta as the premium brand in the industry. We also think its geographically optimal hubs, high local market share, robust loyalty program and unique corporate culture all support healthy returns on capital. Delta currently trades at 6x our estimate of normalized earnings per share. We believe this is an attractive valuation for a competitively advantaged and growing business in an out-of-favor industry.”
While we acknowledge the potential of Delta (DAL) as an investment, our conviction lies in the belief that some 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 DAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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