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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Are Airlines Worth Investors' Time?

Stocks in this article: UAL LCC LUV ALK

The airline, like United, has thin profit and operating margins, but its trailing 12-month return on equity ballooned to 157%. The airline has $4.48 billion in total debt and $2.52 billion in total cash.

Comparing UAL to LCC from an investor's standpoint, I'd give US Airways the advantage with its forward PE of only 2.86 and a mysteriously low five-year expected PEG ratio of 0.04. The price-to-sales is also suspiciously low, just 0.12.

Right now I'd be willing to add the company to a very short list of airline stocks worth owning. The other two from my experience and from a key financial statistics perspective are perennial favorites Southwest Airlines (LUV) and Alaska Air Group (ALK).

Surprisingly, LUV comes in second place when compared with ALK if you look at share price performance over the last four years, which the chart below illustrates.

LUV Chart LUV data by YCharts

When one compares its earnings-per-share growth over the same period of time Alaska Air is again triumphant, up over 138% compared to Southwest's 43%. The chart below tells that story well.

ALK Earnings Per Share Growth Chart ALK Earnings Per Share Growth data by YCharts

Investing in airlines stocks is a dicey business, fraught with hard-to-anticipate risks. My sources tell me it's better to invest in the ones that are firing on all engines now and not to bet on future performance. That would give US Airways and Alaska Air the edge and the advantage.

At the time of publication the author had no position in any of the companies mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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