In this article, we will be taking a look at 10 airline stocks to buy now. To skip our detailed analysis of these stocks and the airline industry, you can go directly to see the 5 Best Airline Stocks to Buy Now.
With the onset of the COVID-19 pandemic, the airline sector was one of the first to fall. As lockdowns ensued and domestic and international travel regulations were imposed, the decline of the airline sector was reasonably foreseeable. Yet KPMG’s Aviation Industry Leaders Report for 2022 had shed a different light on the sector’s performance as the world recovers from the pandemic. According to the report, the three sectors of the airline industry – cargo, domestic, and international passenger travel – each have drastically different recovery paths this year. Air cargo has proved to be resilient even throughout the pandemic. The recovery witnessed in the domestic passenger market shows a return to within 20% of pre-pandemic figures as well. The state of the sector in the broader market is beginning to inspire optimism among investors in light of these findings.
According to a Bloomberg article published this June, the International Air Transport Association (IATA) believes the airline industry will return to profit as early as 2023. The trade group has a more optimistic outlook on mitigating losses in the sector this year, estimating $9.7 billion in 2022 losses now, compared to the earlier figure of $11.6 billion. As air travel recovers from the COVID-19 crisis, demand for travel is resulting in increased bookings and higher air traffic. North America is already beginning to see a return to profit this year, with airlines there expected to post a collective net income of $8.8 billion. Global passenger numbers are also expected to reach 83% of pre-pandemic levels by the end of the year. IATA has been positive on loss reduction in light of 2021 losses coming in far lower than the loss suffered by the industry in 2020. In 2021, the industry’s loss totaled $42 billion, which stands in stark comparison to the $138 billion loss recorded the previous year. Airline stocks like Delta Air Lines, Inc. (NYSE:DAL) and The Boeing Company (NYSE:BA) are now beginning to attract more investor attention as a result.
This September, United Airlines Holdings, Inc. (NYSE:UAL) raised its third-quarter financial outlook, leading to airline stocks rising. According to a Wall Street Journal article from September 7, United Airlines Holdings, Inc. (NYSE:UAL) rose 3.9% after this announcement, while Delta Air Lines, Inc. (NYSE:DAL) rose 2.3%. The former now sees its total operating revenue up by 12% from the third quarter of 2019, compared to 11% before. Other airline stocks such as American Airlines Group Inc. (NASDAQ:AAL) also benefitted from United Airlines Holdings, Inc.’s (NYSE:UAL) positive outlook. American Airlines Group Inc. (NASDAQ:AAL) rose by 2.9% as well.
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Let’s now take a look at the 10 airline stocks to buy now.
Our Methodology
We have considered various factors in selecting these stocks, such as analyst ratings, price targets, projected EPS growth, operating cash flow growth, dividend growth rate, where applicable, and more. These stocks are among the most popular airline options hedge funds are piling into, according to Insider Monkey’s hedge fund data for the second quarter. They are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest.
Best Airline Stocks to Buy Now
10. Ryanair Holdings plc (NASDAQ:RYAAY)
Number of Hedge Fund Holders: 14
Ryanair Holdings plc (NASDAQ:RYAAY) is an airline company providing scheduled-passenger airline services in Ireland, the UK, Italy, Spain, Germany, and other European countries. The company also provides a range of ancillary services, like non-flight scheduled and Internet-related services. It is based in Swords, Ireland.
On August 8, Jarrod Castle at UBS reiterated a Buy rating on shares of Ryanair Holdings plc (NASDAQ:RYAAY).
This September, Ryanair Holdings plc (NASDAQ:RYAAY) reported August traffic of 16.9 million passengers, compared to 11.1 million passengers a year ago. The new record is an all-time high for the company. In the fiscal first quarter of 2023, Ryanair Holdings plc’s (NASDAQ:RYAAY) EPS was $0.76, beating the previous quarter’s -$0.97 EPS. Its revenue was $2.66 billion, beating estimates by $47.95 million.
There were 14 hedge funds long Ryanair Holdings plc (NASDAQ:RYAAY) in the second quarter, with a total stake value of $273 million. Harris Associates was the largest stakeholder in the company, holding 8.9 million shares worth $601 million.
Artisan Partners Limited Partnership, a high-value-added investment management firm, mentioned Ryanair Holdings plc (NASDAQ:RYAAY) in its fourth quarter 2020 investor letter. Here’s what the firm said:
“Our top Q4 contributor was Ryanair Holdings, a low-cost European airline. The positive vaccine-related news caused Ryanair and other travel and leisure stocks to rally sharply as markets looked ahead to travel demand’s recovery in 2021. We continue to like Ryanair’s leading market position, low cost base and history of returning capital to shareholders.”
Ryanair Holdings plc (NASDAQ:RYAAY), like Delta Air Lines, Inc. (NYSE:DAL), United Airlines Holdings, Inc. (NYSE:UAL), and The Boeing Company (NYSE:BA), is among the most popular airline stocks on the rise today.
9. Air Transport Services Group, Inc. (NASDAQ:ATSG)
Number of Hedge Fund Holders: 17
Air Transport Services Group, Inc. (NASDAQ:ATSG) is an air freight and logistics company providing aircraft leasing and air cargo transportation and related services in the US and internationally. The company provides aircraft, flight crews, aircraft maintenance, aircraft hull and liability insurance, alongside aviation fuel services. It is based in Wilmington, Ohio.
In a press release this August, Air Transport Services Group, Inc. (NASDAQ:ATSG) announced its latest earnings results including an adjusted free cash flow of $72 million. The company also raised its capital spending projection for 2022 by $35 million, bringing the total up to $625 million. Air Transport Services Group, Inc. (NASDAQ:ATSG) had an EPS of $0.59, beating estimates by $0.09, and revenue of $509.67 million, also beating estimates by $4.13 million.
Air Transport Services Group, Inc. (NASDAQ:ATSG) was found among the 13F holdings of 17 hedge funds in the second quarter, and 21 hedge funds in the previous quarter. Their total stake values were $155 million and $174 million, respectively.
Bernzott Capital Advisors, an investment management firm, mentioned Air Transport Services Group, Inc. (NASDAQ:ATSG) in its second quarter 2021 investor letter. Here’s what the firm said:
“Air Transportation Services (ATSG): Demand for the company’s leased air freighters for time-definite transportation networks has been jumpstarted in recent years by e-commerce growth. The company’s order book is its strongest ever, with contract terms lengthening in some cases. This provides excellent long-term visibility with a more stable earnings profile than other transportation companies. The prospects for significant cash flow growth are bright. The company operates roughly half of Amazon’s freighters, and Amazon owns 19.5% of the company. DHL is also a significant, long-term customer. The Department of Defense is the company’s largest customer, as ATSG handles both passengers and freight for the military. This business, along with a smaller passenger charter operation, should stabilize in 2021 after pandemic-induced weakness, and shift to a tailwind in 2022. ATSG trades at just 7x EV/EBITDA and offers attractive upside potential.”
8. SkyWest, Inc. (NASDAQ:SKYW)
Number of Hedge Fund Holders: 17
SkyWest, Inc. (NASDAQ:SKYW) is the operator of a regional airline in the US. The company works through its SkyWest Airlines and SkyWest Leasing segments. It leases regional jet aircraft and spare engines to third parties, alongside providing a range of related services.
Deutsche Bank’s Michael Linenberg has a Hold rating on SkyWest, Inc. (NASDAQ:SKYW) shares as of July 29. The analyst also placed a price target of $25 on the stock.
SkyWest, Inc. (NASDAQ:SKYW) has a year-over-year revenue growth rate of 36.52% and a forward dividend per share growth rate of 12.62%. The company’s EPS in the second quarter was $1.07, beating estimates by $0.64. SkyWest, Inc. (NASDAQ:SKYW) also had revenue of $799.09 million, beating estimates by $75.85 million.
Arrowstreet Capital was the largest stakeholder in SkyWest, Inc. (NASDAQ:SKYW) in the second quarter, holding 736,653 shares worth $15.7 million. In total, 17 hedge funds were long the stock in that quarter, with a total stake value of $65.8 million.
7. Copa Holdings, S.A. (NYSE:CPA)
Number of Hedge Fund Holders: 18
Copa Holdings, S.A. (NYSE:CPA) is a provider of airline passenger and cargo services, operating through its subsidiaries. The company provides about 204 daily scheduled flights to 69 destinations in 29 countries. It operates primarily in North, Central, and South America, alongside the Caribbean from its Panama City Hub.
An Overweight rating was reiterated on shares of Copa Holdings, S.A. (NYSE:CPA) on August 5 by analyst Pablo Monsivais at Barclays. The analyst also raised his price target on the stock from $85 to $90.
This September, Copa Holdings, S.A. (NYSE:CPA) mentioned that its passenger traffic for August rose by 2% compared to the level pre-COVID-19. The company’s consolidated capacity increased by 0.4% in the same month. Over the next three to five years, Copa Holdings, S.A.’s (NYSE:CPA) EPS is expected to grow by 10%, and its year-over-year operating cash flow growth rate is 223.97%.
In the second quarter, 18 hedge funds were long Copa Holdings, S.A. (NYSE:CPA), in comparison to 29 hedge funds in the previous quarter. Their total stake values were $308 million and $433 million, respectively.
6. Spirit Airlines Incorporated (NASDAQ:SAVE)
Number of Hedge Fund Holders: 25
Spirit Airlines Incorporated (NASDAQ:SAVE) is an airline service provider based in Miramar, Florida. The company serves 85 destinations in 16 countries in the US, Latin America, and the Caribbean. As of December 31, 2021, it had a fleet of 173 Airbus single-aisle aircraft.
Conor Cunningham at Melius Research initiated coverage of Spirit Airlines Incorporated (NASDAQ:SAVE) shares on August 15 with a Hold rating. The analyst also placed a $27 price target on the stock.
Spirit Airlines Incorporated (NASDAQ:SAVE) has a year-over-year revenue growth rate of 91.09%. The company’s EPS in the second quarter was -$0.30, beating estimates by $0.16. Spirit Airlines Incorporated (NASDAQ:SAVE) also brought in revenue of $1.37 billion, beating estimates by $20.51 million.
Our hedge fund data shows 25 funds long Spirit Airlines Incorporated (NASDAQ:SAVE) in the second quarter, with a total stake value of $333 million. Of these funds, PAR Capital Management was the largest stakeholder in the company, holding 4.3 million shares worth $101.6 million.
Spirit Airlines Incorporated (NASDAQ:SAVE), like Delta Air Lines, Inc. (NYSE:DAL), United Airlines Holdings, Inc. (NYSE:UAL), and The Boeing Company (NYSE:BA), is one of the top airline stocks elite hedge funds are buying this year.
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Disclosure: None. 10 Best Airline Stocks to Buy Now is originally published on Insider Monkey.
