In this article, we will look at the 5 best airline stocks to buy now. If you want to read our discussion on the airline industry, you can go directly to 10 Best Airline Stocks To Buy Now.
5. Copa Holdings, S.A. (NYSE:CPA)
Number of Hedge Fund Holders: 29
Copa Holdings, S.A. (NYSE:CPA) is the parent company of Panama-based Copa Airline and its Colombian subsidiary.
In a research note issued on August 5, Pablo Monsivais at Barclays increased the price target on Copa Holdings, S.A. (NYSE:CPA) from $85 to $90 and maintained an Overweight rating on the stock. The analyst highlighted that the airline industry is still undergoing a challenging year as the global economy is recovering from the COVID-19 pandemic. However, the differentiated strategy adopted by Copa Holdings, S.A. (NYSE:CPA) is working in the company’s favor, as reflected in the Q2 2022 results. Copa Holdings, S.A. (NYSE:CPA) saw its revenue increase by 127.9% YoY to $693.39 million, outperforming the consensus estimate of $678.55 million. Meanwhile, the adjusted EPS of 32 cents was eight cents higher than the analysts’ forecast.
Renaissance Technologies was the leading hedge fund investor in Copa Holdings, S.A. (NYSE:CPA) during Q2 2022.
4. Alaska Air Group, Inc. (NYSE:ALK)
Number of Hedge Fund Holders: 30
Alaska Air Group, Inc. (NYSE:ALK) is a SeaTac, Washington-based airline holding company that owns Alaska Airlines as a mainline carrier and Horizon Air as a regional carrier.
On July 21, Alaska Air Group, Inc. (NYSE:ALK) reported its Q2 2022 results. Revenue increased by 73.9% YoY to $2.66 billion and outperformed the analysts’ forecast of $2.59 billion. The boost in revenue was driven by stronger demand for air traveling post-pandemic. Furthermore, the adjusted EPS of $2.19 beat analysts’ expectations of $1.97.
Alaska Air Group, Inc. (NYSE:ALK) also gave a strong outlook for Q3 as it anticipates revenue growth of 16% to 19% compared to 2019 levels of $2.77 – $2.84 billion. Meanwhile, the consensus estimate stood at $2.59 billion. The airline also received delivery of nine Boeing 737 Max 9 aircraft during Q2 2022, bringing the total fleet size to 28. Analysts see Alaska Air Group, Inc. (NYSE:ALK) as a well-positioned stock to benefit from the increase in travel demand.
3. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 31
United Airlines Holdings, Inc. (NASDAQ:UAL) is a Chicago, Illinois-based holding company for United Airlines.
In a report issued on July 25, Stephen Trent at Citi gave United Airlines Holdings, Inc. (NASDAQ:UAL) stock a target price of $56 and a Buy rating. The analyst thinks that the market is confused about whether the momentum in travel would be able to withstand economic uncertainty. Trent added that economic weakness would cause crude oil prices to decline, and capacity can be expected to recover to a point where United Airlines Holdings, Inc. (NASDAQ:UAL) could enjoy a dilution in seat mile cost without diluting the total revenue per available seat mile (TRASM) significantly. Earlier in August, United Airlines Holdings, Inc. (NASDAQ:UAL) deposited $10 million for the development and delivery of 100 electric flying taxis by Archer Aviation Inc. (NYSE:ACHR).
Miller Value Partners shared its bullish stance on United Airlines Holdings, Inc. (NASDAQ:UAL) in its Q2 2022 investor letter. Here’s what the firm said:
“United (NASDAQ:UAL) trades at a similarly depressed multiple, 3.6x. Outside of two months prior to the pandemic, it’s also only been below 4x in Jun 2016 as well. It rose ~80% over the next year. Travel company stock prices seem to be caught in the vortex of simple rules that drive many systematic and macro discretionary strategies. Recession equals sell consumer discretionary. High oil prices mean sell transportation. The facts don’t matter, at least in the short term. We believe they absolutely will in the long term, which is why we’ve added to our exposure.”
2. Southwest Airlines Co. (NYSE:LUV)
Number of Hedge Fund Holders: 45
Southwest Airlines Co. (NYSE:LUV) is a Dallas, Texas-based airline company. The company is considered the biggest low-cost airliner in the world.
In early August, Southwest Airlines Co. (NYSE:LUV) lifted the expiration date from its flight credits. The company’s management anticipates the recovery in business travel to offset the decline in summer leisure travel during the fall season. Southwest Airlines Co. (NYSE:LUV) considers September and October as the top months for business-related traveling.
Helane Becker at Cowen gave Southwest Airlines Co. (NYSE:LUV) stock a target price of $55 with an Outperform rating on July 29. The analyst highlighted a buying opportunity following the recent stock sell-off. In Q2 2022, Southwest Airlines Co. (NYSE:LUV) posted record revenue that surpassed analysts’ forecast. Observers think that the company has a strong balance sheet.
Out of the 912 hedge funds in Insider Monkey’s database, 45 funds held a stake in Southwest Airlines Co. (NYSE:LUV) as of Q1 2022.
1. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 55
Delta Air Lines, Inc. (NYSE:DAL) is an Atlanta, Georgia-based legacy airliner.
On July 20, Conor Dwyer at Berenberg gave Delta Air Lines, Inc. (NYSE:DAL) stock a Buy rating with a target price of $48.50. The analyst said that he favors US airlines as compared to European airlines due to “more reasonable” valuations. Furthermore, American carriers have higher domestic exposure and provide better visibility regarding consolidation.
Berenberg shared that the enterprise value of Delta Air Lines, Inc. (NYSE:DAL) reached 80% of the levels in 2019 as of July 2022. The revenue is anticipated to cross the 2019 levels in Q3 2022. The analyst also highlighted that the credit card deal with the American Express Company (NYSE:AXP) would help Delta Air Lines, Inc. (NYSE:DAL) avoid volatility in the bottom line in the future.
Lansdowne Partners increased its stake in Delta Air Lines, Inc. (NYSE:DAL) by 19% in Q2 2022.
You can also take a peek at Top 10 Stock Picks of Teresa Barger’s Cartica Management and 10 Hedge Funds That the Economic Recession is Crushing.
