LAN Airlines S.A. (ADR) (LFL), Gol Linhas Aereas Inteligentes SA (ADR) (GOL): Are Latin American Airlines Ready for Takeoff?

Both of these performances compare very unfavorably against Central American airline group Copa Holdings, S.A. (NYSE:CPA), which is up 31.8% year-to-date. In contrast to Lan and Gol, Copa Airlines is toward the top of its 52-week range and looks like it could be overvalued. Copa already has had much of its growth priced into its share price and so it is very likely to decline in the future. On the other hand, Lan and Gol look like they have more growth left and so they are better picks for the future than Copa Holdings, S.A. (NYSE:CPA).

The goal is higher share prices

Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) has a very rich home market that has been slowing recently, but there are still a lot of growth opportunities. Brazil is a potentially huge market for aviation and there is a lot of opportunity for profit from these customers. Due to Brazil’s huge geography, aviation is by far the fastest way to get around the cities that are scattered across Brazil. LAN Airlines S.A. (ADR) (NYSE:LFL) does not have as big a home market, which is why it has had to expand outside of Chile. Gol has much of South America under its wings as well the huge Brazilian market. That is why I believe that there is more opportunity for Gol to expand faster than Lan.

Where to go from here

The airline market in South America is experiencing some difficulties, but that does not mean there isn’t room to profit in the future. It is easy to look at the recent slides in the stock prices and say that the market is broken. I believe that both Gol and Lan will have their share prices recover and that they will both experience growth. I believe that Gol will  go up faster than Lan but that they are both good picks for future growth.

Jeremy Worthington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jeremy is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Are Latin American Airlines Ready for Takeoff? originally appeared on Fool.com and is written by Jeremy Worthington.

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