Are Airline Stocks Worth Buying?
Two dealers were grappling with the issue on Tuesday when the group raised concerns about a fuel shortage due to this weekend Cyber attack on a large US pipeline.
The US Global Jets ETF (JETS), a basket of 39 airline stocks, closed trading more than 1.5% on Tuesday. It’s down about 8% from the most recent highs in March.
“Not all airlines are created equal,” said Nancy Tengler, chief investment officer at Laffer Tengler Investments.
Southwest has hedges that will become profitable when crude oil prices hit $ 65 and $ 70-80 a barrel. Another “really aggressive protection program” will begin in 2022, Tengler said. crude oil Prices rose to just over $ 65 a barrel on Tuesday.
Southwest also announced that for the first time since the Covid pandemic began, it will hire new flight attendants who are pausing the economy due to strong demand.
“Once the pipeline is back on track this is one company you want to take advantage of its weakness as it will be a strong player in the medium and long term,” said Tengler. “Mostly vacation trips. We don’t have to wait for business trips to come back. We own and would be buyers here.”
Southwest found another fan in Bill Baruch, founder and president of Blue Line Capital and Blue Line Futures.
“I’m very optimistic about crude oil. I think crude oil can reach as high as $ 100 in the next 18 months, and I think this will be a headwind for the airlines,” Baruch said in the same interview .
Having recently crossed a major trend line, the stock would be a buy on a pullback to around $ 54 per share, Baruch said, citing a chart.
Southwest stock was down over 2.5% on Tuesday at $ 59.78.
Baruch’s other choice was another low-cost airline Spirit Airlines.
“I own Spirit Airlines and I like Spirit Airlines,” he said, adding that he was “very reluctant” to invest in airlines other than Spirit and Southwest.
With travel picking up speed again, consumers will likely be ready to go on vacation in the coming months, Baruch said.
“I think Spirit Airlines will be well positioned to capitalize [on] that, “he said.” On a technical basis, I think you saw a good rally out of the hole here in Spirit. “
“The $ 36 area has been very sticky and while there is a lot of resistance there, it holds that resistance and almost builds a flag-like pattern that I find very bullish,” said Baruch.
Spirit Airlines shares closed nearly 3% on Tuesday at $ 33.48.
Disclosure: Tengler and Laffer Tengler Investments own shares in Southwest Airlines. Baruch owns shares in Spirit Airlines.