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5 Blue-Chip Stock Buys to Beat the S&P

United Continental Holdings

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The best thing United Continental Holdings (UAL - Get Report) has going for it right now is the fact that it's not American Airlines.

UAL is the largest airline in the country, post-merger United operates approximately 6,000 flights each day from what's arguably the most attractive hub network in the country. The firm gained its current shape back in 2010 when United merged with Continental to combine forces and cut costs, and the early indications show that the firm is doing just that.

The UAL merger didn't come without turbulence, and the combination of excessive combination costs and operational hiccups certainly didn't help instill investor confidence right after the deal closed. But the fact that UAL is keeping its bottom line in the black is promising, especially in the economic conditions we're in right now.

To be clear, UAL isn't the best-in-breed legacy airline stock -- Delta Air Lines (DAL) is. But Delta's stock price doesn't sport the same level of antipathy that United's does. Right now, short sellers have pushed UAL's short interest ratio up to 10, a level that indicates it would take two full weeks of buying at current volume levels for shorts to exit their trades. That puts UAL's stock in potential short squeeze territory.

Critical screw-ups at rival American are likely to help push a disproportionate share of traffic to United this Fall -- something investors will see reported in UAL's financials sooner rather than later.

To see this week's short squeezes in action, check out the of Large-Cap Short Squeezes portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.


Follow Stockpickr on Twitter and become a fan on Facebook.
At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on
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GPC $86.49 0.31%
LH $101.31 -3.10%
SIAL $139.76 -0.04%
UAL $46.96 -1.60%
SYY $42.59 -0.28%


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