Some Airline Stocks Worth a Flier

Buying airline stocks now seems nothing less than foolhardy. But it can pay off if you have the stomach for it.

First, one must separate the wheat from the chaff. Judging by their plummeting stock prices, mounting losses and horrendous debt loads, the chaff includes US Airways (U Quote) and America West (AWA Quote). The wheat, by all accounts, is Southwest Airlines (LUV Quote), by virtue of its low costs and unimposing debt.

Yet a bet on Southwest seems little wiser than one on US Airways or America West, considering how ubiquitous the buy-Southwest argument has become. Its stock has dropped just 15% since trading resumed, easily outpacing the average airline stock and suggesting many airline investors are already riding that horse.

So the key is to find the wheat that's being treated like chaff. Two analysts say the companies that could thrive after the industrywide shakeout include Continental Airlines (CAL Quote) and AMR (AMR Quote), both of which are down substantially but offer strong value fundamentally. ...