We recently published a list of the 15 NASDAQ Stocks with the Lowest P/E Ratios. In this article, we are going to take a look at where American Airlines Group Inc. (NASDAQ:AAL) stands against the other NASDAQ stocks.
A Revised U.S. Economic Outlook
At the start of the year, strategists and economists projected the U.S. economy to perform better in 2025 with the U.S. stock market positioned for another year of above-trend growth. Now, economic growth projections are moving slightly to the lower end of the previous forecasts.
Economic forecasting teams from Morgan Stanley, Goldman Sachs, and others revised their 2025 GDP projections lower. Morgan Stanley now projects a 1.5% growth in 2025, and Goldman expects a 1.7% growth.
The year-end targets for the S&P 500 might be too optimistic. If things go the way they are being projected, the S&P 500 will potentially underperform compared to growth in 2024, impacting the NASDAQ 100 index as well. So far in 2025, the S&P 500 has plunged over 3.30% while the NASDAQ 100 index has dropped over 5.50%, as of March 18. The first quarter is about to end and markets are volatile now with the new U.S. administration implementing its tariff policy.
The head of US equity strategy at RBC Capital Markets, Lori Calvasina, pointed out that the U.S. equity market can hold the drop if things go south.
“We have seen the U.S. equity market on a rocky path higher through year-end, and have believed that our 6,600 can absorb a 5-10% drawdown,” Calvasina wrote in a note to clients on March 9. She further added, “risks of a drawdown of more than 10% have admittedly grown, however. If that occurs, we see a ‘growth scare’ of a 14-20% decline from the peak as most likely, which could shift us into our bear case.”
President Donald Trump addressed Congress with potential disturbance to the economy from his tariff policies. In an interview with Fox Business on March 9, President Trump said:
“There is a period of transition because what we’re doing is very big … We’re bringing wealth back to America. That’s a big thing … it takes a little time, but I think it should be great for us.”
Markus Mainka/shutterstock.com
Our Methodology
To compile our list of NASDAQ stocks with the lowest P/E ratios, we first compiled a list of 40 NASDAQ listed firms with a forward P/E ratio lower than 10 and a market capitalization greater than $150 million. Then, we shortlisted the 15 stocks with the lowest P/E ratios and ranked them based on the number of hedge fund holders, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
American Airlines Group Inc. (NASDAQ:AAL)
Forward P/E ratio: 6.10
No. of Hedge Fund Holders: 59
American Airlines Group Inc. (NASDAQ:AAL) is a leading network air carrier that provides scheduled air transportation services for passengers and cargo through its hubs across a vast domestic and international route network.
American Airlines Group Inc. (NASDAQ:AAL) recently updated its financial and operational outlook for the first quarter of 2025. The company highlighted that the revenue environment seems weaker now than initially projected in its January guidance, mainly due to the impact of Flight 5342 and a slowdown in the domestic leisure segment. The company now expects the Q1 revenue to remain flat compared to the same period in 2024, a downward revision from the previously projected growth of 3% to 5%.
Most of the analysts maintain their rating on AAL with a slight adjustment in the price target. On March 12, Citi analyst Stephen Trent maintained a Buy rating on AAL shares, keeping a price target of $21.50. Even though Trent acknowledged the weaker revenue outlook for Q1, he remains optimistic about AAL’s medium-term growth potential. The analyst cited strong international premium travel demand, growing loyalty revenue, and strategic initiatives to re-engage corporate clients as key strengths.
Overall AAL ranks 2nd on our list of the NASDAQ stocks with the lowest P/E ratios. While we acknowledge the potential of AAL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.