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NEW YORK (TheStreet) -- Shares of United Continental (UAL) - Get Free Report were gaining 5.4% to $56.22 Friday morning following the announcement that the airline will join the S&P 500 next week.

United Continental will replace pharmaceutical and medical device company Hospira (HSP) in the index after the closing bell on September 2. Pfizer's (PFE) - Get Free Report acquisition of Hospira is expected to close on or around that date.

United Continental will be added to the S&P 500 GICS (Global Industry Classification Standard) Airlines Sub-Industry index.

About 2.1 million shares of United Continental were traded by 9:52 a.m. following the announcement, compared to the company's average trading volume of about 5.4 million shares a day.

Video game publisher Activision Blizzard (ATVI) - Get Free Report was also recently added to the S&P 500. The company will be added to the index today after the closing bell.

TheStreet Ratings team rates UNITED CONTINENTAL HLDGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate UNITED CONTINENTAL HLDGS INC (UAL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • UNITED CONTINENTAL HLDGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED CONTINENTAL HLDGS INC increased its bottom line by earning $2.79 versus $1.30 in the prior year. This year, the market expects an improvement in earnings ($11.10 versus $2.79).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Airlines industry average. The net income increased by 51.2% when compared to the same quarter one year prior, rising from $789.00 million to $1,193.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Airlines industry and the overall market, UNITED CONTINENTAL HLDGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $1,752.00 million or 19.67% when compared to the same quarter last year. In addition, UNITED CONTINENTAL HLDGS INC has also modestly surpassed the industry average cash flow growth rate of 15.33%.
  • You can view the full analysis from the report here: UAL Ratings Report