12 Best Airline Stocks To Invest In Right Now

Published on August 11, 2021 at 9:23 am by Usman Kabir in Hedge Funds, News

In this article we discuss the 12 best airline stocks to invest in right now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Airline Stocks To Invest In Right Now.

Airline stocks that took a battering for the best part of last year because of the COVID-19 crisis have slowly started to bounce back as the vaccinations allow for the gradual reopening of the economy and the increase in domestic and international travel. The International Air Transport Association (IATA), a Geneva-based trade body, expects that the airline industry will narrow down annual losses to $47 billion in 2021 compared to losses of over $126 billion in 2020. According to IATA, regions with large domestic markets are expected to lead this growth.

In a report released in April, the trade body underlined that a surge in virus cases and vaccine delays at the beginning of the year had impacted the airline industry. IATA thus revised 2021 growth forecasts in terms of global revenue passenger kilometers to 26% in 2021 compared to 2020. It also highlighted that cargo remained a strong business for the sector and was becoming more important to global trade, with cargo ton kilometres growing at more than 13% compared to the forecast growth of trade, per World Trade Organization, that stood at 8%.

Investors should take advantage of these growth opportunities in the airline sector in the coming weeks. Some of the best airline stocks in this context are Southwest Airlines Co. (NYSE: LUV), Delta Air Lines, Inc. (NYSE: DAL), and Alaska Air Group, Inc. (NYSE: ALK), among others discussed in detail below. According to Research and Markets, the global air transport market is expected to grow from $460 billion in 2020 to $657 billion in 2025 at a compound annual growth rate of 6%, factoring in the impact of the virus crisis.

The uncertainty in the market in relation to the spread of new virus variants has hit investor interest around airline stocks and left market experts scratching their heads. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Photo by Lukas Souza on Unsplash

Our Methodology

With this context in mind, here is our list of the 12 best airline stocks to invest in right now. We chose these stocks based on their popularity among the 866 hedge funds tracked by Insider Monkey. We also took into account analyst ratings, future growth potential and fundamentals in our criteria. We ranked these stocks based on the number of hedge funds having stakes in each.

Best Airline Stocks To Invest In Right Now

12. Azul S.A. (NYSE: AZUL)

Number of Hedge Fund Holders: 11

Azul S.A. (NYSE: AZUL) is a Brazilian firm that markets passenger and cargo air transport services. It is placed twelfth on our list of 12 best airline stocks to invest in right now. The firm has a fleet of 162 aircraft that travel to more than 112 destinations around the world. On June 14, the company reported that passenger traffic in May had risen 361% year-on-year to 1.5 billion revenue passenger kilometres. Domestic traffic was up 435% year-on-year while international traffic was up 14% year-on-year in May.

On July 15, investment advisory Deutsche Bank maintained a Buy rating on Azul S.A. (NYSE: AZUL) stock and raised the price target to $30 from $25, noting that there was a pickup in travel demand in key Latin American markets that would benefit the firm.

At the end of the first quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $69 million in Azul S.A. (NYSE: AZUL), down from 17 the preceding quarter worth $160 million.

11. Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS)

Number of Hedge Fund Holders: 14

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS) is ranked eleventh on our list of 12 best airline stocks to invest in right now. The firm is based in Mexico and provides air transport services. It has a fleet of 86 aircraft that fly to 68 destinations, mostly in the Americas. In earnings results for the second quarter, posted on July 15, the firm reported a revenue of Ps11.5 billion, up 38% compared to the revenue over the same period last year. The earnings per share were Ps1.32.

On July 21, investment advisory Citi raised the price target on Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS) stock to $31 from $27 and reiterated a Buy rating, underlining that the stock was one of the airline favorites of the advisory in the region.

At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $172.9 million in Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE: VLRS), down from 19 in the preceding quarter worth $172.5 million.

10. Ryanair Holdings plc (NASDAQ: RYAAY)

Number of Hedge Fund Holders: 14

Ryanair Holdings plc (NASDAQ: RYAAY) is an Irish firm that provides airline services. It is placed tenth on our list of 12 best airline stocks to invest in right now. It has a fleet of 451 aircraft that travel to more than 210 airports, mostly within the European Union. In earnings results for the first quarter, posted on July 26, the firm reported earnings per share -€0.24. The revenue over the period was €370 million, up close to 196% compared to the revenue over the same period last year.

On July 27, investment advisory Redburn upgraded Ryanair Holdings plc (NASDAQ: RYAAY) stock to Buy from Neutral and highlighted that the firm was continuing to be seen as one of the winners on the other side of the crisis.

At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $568 million in Ryanair Holdings plc (NASDAQ: RYAAY), down from 23 the preceding quarter worth $782 million.

Just like Southwest Airlines Co. (NYSE: LUV), Delta Air Lines, Inc. (NYSE: DAL), and Alaska Air Group, Inc. (NYSE: ALK), Ryanair Holdings plc (NASDAQ: RYAAY) is one of the best airline stocks to invest in right now.

In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Ryanair Holdings plc (NASDAQ: RYAAY) was one of them. Here is what the fund 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.”

9. Hawaiian Holdings, Inc. (NASDAQ: HA)

Number of hedge fund holders: 16

Hawaiian Holdings, Inc. (NASDAQ: HA) is ranked ninth on our list of 12 best airline stocks to invest in right now. The firm operates from Hawaii and markets scheduled air transportation services. The firm was founded in 1929 and has a fleet of 61 aircraft. On July 27, the firm posted earnings for the second quarter, reporting earnings per share of -$1.44, beating market estimates by $0.44. The revenue over the period was $410 million, up 584% compared to the revenue over the same period last year.

In late April, investment advisory Wolfe Research upgraded Hawaiian Holdings, Inc. (NASDAQ: HA) stock to Outperform from Peer Perform with a price target of $32, citing valuation following the first quarter earnings report of the firm.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Hawaiian Holdings, Inc. (NASDAQ: HA) with 1.3 million shares worth more than $36 million.

Alongside Southwest Airlines Co. (NYSE: LUV), Delta Air Lines, Inc. (NYSE: DAL), and Alaska Air Group, Inc. (NYSE: ALK), Hawaiian Holdings, Inc. (NASDAQ: HA) is one of the best airline stocks to invest in right now.

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

Number of Hedge Fund Holders: 18

Copa Holdings, S.A. (NYSE: CPA) is a Panama-based firm that provides airline passenger and cargo services. It is placed eighth on our list of 12 best airline stocks to invest in right now. The firm has a fleet of 77 aircraft that travel to 54 destinations around the world. The firm posted earnings for the second quarter on August 4, reporting earnings per share of -$0.38, beating market estimates by $0.82. The revenue over the period was $304 million, beating estimates by close to $44 million.

On June 17, investment advisory Seaport Global upgraded Copa Holdings, S.A. (NYSE: CPA) stock to Buy from Neutral with a price target of $98. Daniel McKenzie, an analyst at the firm, issued the ratings update.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Copa Holdings, S.A. (NYSE: CPA) with 531,228 shares worth more than $42 million.

In addition to Southwest Airlines Co. (NYSE: LUV), Delta Air Lines, Inc. (NYSE: DAL), and Alaska Air Group, Inc. (NYSE: ALK), Copa Holdings, S.A. (NYSE: CPA) is one of the best airline stocks to invest in right now.

7. Mesa Air Group, Inc. (NASDAQ: MESA)

Number of Hedge Fund Holders: 20

Mesa Air Group, Inc. (NASDAQ: MESA) is ranked seventh on our list of 12 best airline stocks to invest in right now. The company operates from Arizona and markets airline services under capacity agreements. It has a fleet of 146 aircraft that travel to 102 cities across the United States and Mexico. On August 9, the firm posted earnings for the third fiscal quarter, reporting earnings per share of $0.11, in line with market estimates. The revenue over the period was $125 million, up 71% year-on-year.

On May 11, investment advisory Deutsche Bank upgraded Mesa Air Group, Inc. (NASDAQ: MESA) stock to Buy from Hold with a price target of $15, noting that the earnings for the second quarter for the firm pointed to a profitable 2021.

At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $69 million in Mesa Air Group, Inc. (NASDAQ: MESA), up from 14 the preceding quarter worth $48 million.

Southwest Airlines Co. (NYSE: LUV), Delta Air Lines, Inc. (NYSE: DAL), and Alaska Air Group, Inc. (NYSE: ALK) are some of the best airline stocks to invest in right now, in addition to Mesa Air Group, Inc. (NASDAQ: MESA).

6. Spirit Airlines, Inc. (NYSE: SAVE)

Number of Hedge Fund Holders: 24

Spirit Airlines, Inc. (NYSE: SAVE) is a Florida-based firm that provides airline services. It is placed sixth on our list of 12 best airline stocks to invest in right now. The firm has a fleet of 157 aircraft that travel to 78 destinations around the world. On July 28, the firm posted earnings for the second quarter, reporting a revenue of more than $859 million, up over 520% compared to the revenue over the same period last year and beating market predictions by close to $42 million. The firm has a market cap of over $2.8 billion.

On June 15, investment advisory Citi upgraded Spirit Airlines, Inc. (NYSE: SAVE) stock to Buy from Neutral and raised the price target to $42 from $40, appreciating solid updates to the business in the second quarter.

Out of the hedge funds being tracked by Insider Monkey, Minneapolis-based investment firm Whitebox Advisors is a leading shareholder in Spirit Airlines, Inc. (NYSE: SAVE) with 35.7 million shares worth more than $109 million.

Southwest Airlines Co. (NYSE: LUV), Delta Air Lines, Inc. (NYSE: DAL), and Alaska Air Group, Inc. (NYSE: ALK) are some of the best airline stocks to invest in right now, alongside Spirit Airlines, Inc. (NYSE: SAVE).

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