Airline stocks have been hit hard due to the coronavirus pandemic in the stock market this year. Despite reported COVID-19 cases surging around the globe, investors may finally be seeing the light at the end of the tunnel. In recent weeks, top airline stocks have been flying higher as positive vaccine news has fueled hopes of an early reopening. The NYSE Arca Airline Index (JETS Stock Report) has increased by about 22% since the beginning of November. We have received positive clinical data from Pfizer’s (PFE Stock Report) and Moderna’s (MRNA Stock Report) coronavirus vaccines sending some of the best airline stocks to buy higher. The companies reported their vaccines showed an effectiveness of 95%, and 94.5%, respectively.
While these top airline stocks may be trading at a big discount, cheap doesn’t always mean it’s a value buy (for the time being at least). So when there’s positive news announcing the high effectiveness of COVID-19 vaccine candidates, you can understand why investors have been on the hunt for the top airline stocks to watch right now. After all, that could suggest that other vaccine candidates in the pipeline could have a good possibility of being successful as well.
For these reasons, airline stock investors have a lot of reasons to be excited again. The positive vaccine news could suggest that the coronavirus pandemic is finally coming to an end. But it’s important to note that it will take some time to distribute the vaccines to the masses globally. For investors betting on a full recovery in top airline stocks, patience is key. With all that being said, let’s take a closer look at 3 of the best airline stocks to buy or sell in the stock market today.
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First up on the list is, American Airlines Group Inc. (AAL Stock Report). American Airlines is one of the largest airline companies in the world. The airline has more than 200 million passengers every year, and more than 500,000 passengers daily. Obviously, the COVID-19 pandemic has hugely impacted these numbers, but as we’re on the brink of distributing a vaccine, we’ve seen AAL stock move higher. Month-to-date AAL stock has recovered 11.97% closing Friday’s trading session at $12.53 a share.
In October the company reported its third-quarter earnings. The losses were more narrow than analysts and investors estimated. The company reported revenues of $3.2 billion, a 73% drop year-over-year. This still beats loss expectations from Wall Street. American Airlines also reported a 59% decrease in total available seat miles, and a net loss for the third quarter of $2.4 billion.
Doug Parker, CEO of American Airlines mentioned, “We have a long road ahead and our team remains fully engaged and focused not just on managing through the pandemic, but on making sure we are prepared for when demand returns.”
So why is AAL stock on this list? Well, as we continue to get positive vaccine updates you will start to see re-opening stocks continue to move higher. This will have a direct impact on airline stocks in the market as more people get back to leisure and business travel. Being that American Airlines is one of the biggest airline companies in the world, should you consider AAL stock now for your long-term portfolio?Best Airline Stocks To Buy [Or Sell] Now: United Airline Holdings
Next up on the list is United Airline Holdings (UAL Stock Report). Analysts from JP Morgan have reported that United Airlines is one of the best airline stocks to buy right now. Analysts are optimistic that United Airlines can absorb the current downturn with enough liquidity. They also see a big potential upside from its current valuation. JP Morgan has updated its price target for UAL stock from $44 to $52. Since this positive vaccine news, UAL stock has increased 24.24%, closing Friday’s trading session at $40.94 a share.
The positive vaccine news from Moderna and Pfizer is great for UAL’s plan to jumpstart its business. The company has already begun to execute its plan to launch COVID-19 rapid tests for all passengers moving forward. On November 16th, the company reported that its passengers on a flight from Newark Liberty International Airport to London Heathrow were the first to receive the airline’s free transatlantic COVID-19 testing pilot program. This meant every passenger over the age of two years old and all crew members on the flight was administered rapid tests. Everyone on that flight-tested negative prior to taking off.
“These flights are a good proof-of-concept for governments around the world that are considering making testing part of the travel experience,” commented Toby Enqvist, Chief Customer Officer for United. “Expanding our testing efforts with pilot programs like this one not only helps guarantee passengers* onboard test negative for COVID-19, it also adds another element to our layered approach to safety and demonstrates a way to work within quarantines to key international destinations.”
Now, this is just a pilot program. But if this can prove to be successful at scale we could quickly see other airline stocks follow suit. With all that being said, is UAL stock the best airline stocks to buy now among its competitors?Best Airline Stocks To Buy [Or Sell] Now: Southwest Airlines
Last on the list of top airline stocks is Southwest Airlines (LUV Stock Report). LUV stock has been one of the best performing airline stocks since the positive vaccine news was first reported. Since the beginning of November, LUV stock is up 21.42% closing on Friday at $46.08 per share. The Dallas-based company is currently the nation’s largest domestic air carrier. In 2019 its customer base exceeded 130 million passengers.
Last month Southwest reported its third-quarter earnings. The company reported a net loss of a whopping $1.2 billion, or $1.96 net loss per diluted share. What makes LUV so attractive to investors is its ability to maintain a strong balance sheet. Southwest ended its third quarter with liquidity of $15.6 billion. This is more than enough to cover its current outstanding debt.
“We are one of just a few airlines in the world that limits the number of seats available for sale to promote distancing onboard our aircraft, and we will continue to do so through November. This practice of effectively keeping middle seats open bridged us from the early days of the pandemic, when we had little knowledge about the behavior of the virus, to now. Today, aligned with science-based findings from trusted medical and aviation organizations, we will resume selling all available seats for travel beginning December 1, 2020,” stated Gary C. Kelly, Chairman, and CEO at Southwest.
The company seems to be taking advantage of its balance sheet to capture a bigger market share within the United States. Having the liquidity and wherewithal to be able to make it through the Pandemic, is why LUV stock is on this list. Do you have LUV stock on your watchlist right now?