Drillin’ Down - Airlines Like Delta and ExpressJet Perk Up
If you had told us two weeks ago that airline stocks would have been the best place to be last week, we probably would have raised an eyebrow. Maybe both. As it turns out though, you would have been exactly right. The Dow Jones Airline Index (DJUSAR) led the way last week with a 26% gain…tops for all industry groups. The mid cap airlines did most of the heavy lifting. Then again, most airlines are mid caps, so…
The interesting part here is how they really may be good values right now - at least some of them. They’ve been trashed over the last several months, first because oil was on the rise (making it too expensive to fly), and then because the recession hit (and oil prices were cut in half). Talk about not getting a break.
In any case, we’re going to ‘drill down’ from the top to the bottom. That just means we’re going to look at the transportation sector (not the leading sector last week), then the industry (we already said it was the leading industry), and then we’ll look at some individual stocks in the group.
And once again, these really may be some unrealized values right now. Here’s the sector ranking for all of last week plus Monday’s total.
| Company Name | %Chg: 1 day | WTD Pct Chg | 2-Week (6 day) Pct Chg | %Chg: 4 wk | MTD Pct Chg | 6-Mon Pct Chg | 12-Mon Pct Chg |
| S&P 500 Energy Sector | 11.15% | 11.15% | 19.24% | -23.95% | -17.47% | -34.68% | -31.02% |
| Dow Jones Utility Average | 8.34% | 8.34% | 18.37% | -12.94% | -10.33% | -24.75% | -28.18% |
| Dow Jones U.S. Telecomm TR | 6.81% | 6.81% | 15.10% | -11.73% | -8.94% | -28.97% | -39.14% |
| DJ U.S. Health Care Index | 3.90% | 3.90% | 12.62% | -10.69% | -10.24% | -12.18% | -22.49% |
| DJ Basic Materials | 8.79% | 8.79% | 11.24% | -32.20% | -20.33% | -42.72% | -41.73% |
| DJ Technology | 3.32% | 3.32% | 7.74% | -16.62% | -14.38% | -27.80% | -39.39% |
| S&P 1500 Financial Sector | 2.71% | 2.71% | 7.70% | -22.47% | -20.61% | -37.77% | -50.51% |
| S&P 500 Consumer Staples Sector | 3.13% | 3.13% | 6.91% | -10.59% | -10.74% | -12.22% | -13.65% |
| S&P 1500 Consumer Discretionary | 3.54% | 3.54% | 4.05% | -23.81% | -20.85% | -31.11% | -40.13% |
| Dow Jones Trans. Average | 4.36% | 4.36% | 2.91% | -20.37% | -16.51% | -25.43% | -21.48% |
| S&P 500 Industrials Sector | 3.57% | 3.57% | 2.01% | -22.92% | -18.95% | -35.01% | -39.96% |
That’s right - the transportation stocks basically stunk last week; the airlines managed to overcome it.
Anyway, here (the nearby thumbnail - click it) is the recent performance of all the transportation industries over the last year. It’s visually clear that (a) airline stocks were deeply devalued, and (b) they had a great week last week.
Based on this, we suspect there’s some rotation - in favor of airlines - on the way…what was out of favor is now in, and what was in favor is now out.
If that’s really the case, here are the (reasonably) investable airlines you should be looking at…
| Symbol | Name | EPS Growth (Last Quarter) | Profit Margin | P/E Ratio (TTM) | Price to Sales (TTM) | Performance vs. Industry (YTD) | Performance vs. S&P 500 (YTD) | Market Capitalization |
| AFLYY | Air France - KLM (ADR) | -80.63% | 5.78% | 3.4164 | 0.1754 | -28.69% | – | $5.5B |
| AMR | AMR Corporation | 102.91% | -7.51% | – | 0.1131 | -3.32% | 19.44% | $2.3B |
| BAIRY | British Airways plc (ADR) | -72.25% | 6.82% | 3.6895 | 0.1657 | -55.39% | – | $2.5B |
| CAL | Continental Airlines, Inc. | -6980.69% | -2.30% | – | 0.1131 | -11.09% | 9.84% | $1.5B |
| DLAKY | Deutsche Lufthansa AG (ADR) | 530.94% | 4.42% | 5.4437 | 0.2367 | -20.65% | – | $7.7B |
| JBLU | JetBlue Airways Corporation | 16.72% | 0.13% | 165.126 | 0.4257 | 6.44% | 31.50% | $1.3B |
| LFL | Lan Airlines S.A. (ADR) | -48.21% | 7.81% | 9.5498 | 0.745 | -16.08% | 3.68% | $3.1B |
| LUV | Southwest Airlines Co. | -137.43% | 3.22% | 26.5643 | 0.8502 | 28.58% | 58.85% | $9.0B |
| RYAAY | Ryanair Holdings plc (ADR) | -42.09% | 5.56% | 29.4206 | 1.5003 | -39.18% | -24.86% | $5.7B |
| ZNH | China Southern Airlines Limited | -50.26% | 4.90% | 2.8291 | 0.1175 | -76.83% | -71.37% | $1.0B |
| CPA | Copa Holdings, S.A. | -23.01% | 13.32% | 6.9901 | 0.9258 | -18.10% | 1.18% | $1.1B |
| UAUA | UAL Corporation | -382.41% | -14.49% | – | 0.0632 | -63.73% | -55.19% | $1.6B |
| TAM | TAM S.A. (ADR) | 357.02% | 5.75% | 8.0257 | 0.4614 | -34.85% | -19.52% | $1.9B |
| DAL | Delta Air Lines, Inc. | 95.21% | -36.55% | – | 0.132 | -25.44% | -7.88% | $2.8B |
| NWA | Northwest Airlines Corporation | 90.93% | -32.48% | – | 0.206 | -7.21% | 14.63% | $2.7B |
We were surprised that some of them didn’t entirely stink.
Even more interesting is how we got technical buy signals (based strictly on the charts) on two of these airlines….Delta (DAL) and ExpressJet Holdings (XJT). Take a look at the charts below; the ‘buy’ signal is the blue arrow.
If it were just one (the group’s recent srength) or the other (the buy signals) we might think nothing of it. However, to see several bullish clues line up simultaneously is usually more than a mere concidence.
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