This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

SkyWest's Cash Prompts Upgrade

Stocks in this article: SKYW XJT CAL UAUA DAL AAI PNCL

NEW YORK ( TheStreet) -- Shares of SkyWest (SKYW) jumped Tuesday after Avondale Partners lifted its rating on the stock, giving the St. George, Utah-based company kudos for its cash holdings.

Also citing a bullish view of SkyWest's August deal to acquire ExpressJets Holdings (XJT), analyst Bob McAdoo lifted his rating on the stock to market outperform and boosted his 12-month price target to $16 from $14. McAdoo had been at market perform on the shares since February 2009.

The stock responded well, closing up 5.3%, or 64 cents, to $12.74. Volume of around 450,000 was slightly ahead of the issue's trailing three-month daily average of 433,000. Based on Monday's close at $12.10, the stock was down nearly 29% year-to-date, but it had bounced about 6% since scraping a 52-week low of $11.38 on July 7 prior to Tuesday's run-up.

McAdoo's upgrade looks mainly motivated by the aforementioned cash. He likes both how much SkyWest has -- around $750 million with the XpressJets' deal still pending completion -- and what the company is doing with it.

"SKYW has been using its cash to create growth in a generally shrinking industry," he told clients in a research note. "Excluding its surplus cash, SKYW's market cap is just over 2 times its earnings."

XpressJets has been a loss maker for the past three years and that isn't expected to change in calendar 2010, but McAdoo sees the deal for SkyWest, currently the biggest regional jet operator, to acquire its next largest rival as a relative bargain with numerous strategic benefits.

In particular, he thinks the combined company "will now own center stage" for regional jet operations for the combined entity resulting from the Continental (CAL)- United (UAUA) hook-up that received antitrust clearance late last week.

Bringing Continental into the fold through the XpressJets' deal is big for SkyWest, as its results have been held back for the past two years by major partner Delta Airlines's (DAL) flight reductions. Of the 452 aircraft in SkyWest's fleet as of June 30, a total of 244 were assigned to Delta, compared to 204 to United and the remaining four to AirTran Holdings (AAI).

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs