This Day On The Street
Continue to site
ADVERTISEMENT
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

Are Airlines Worth Investors' Time?

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 - Get Report) and Alaska Air Group (ALK - Get Report).

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.

Make smarter trading decisions and provide investment ideas that could help make you richer. Bryan Ashenberg does the dirty work so you don't have to!

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
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!
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
ALK $62.97 0.00%
LUV $41.79 0.00%
UAL $61.49 0.00%
AAPL $124.75 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs