NEW YORK (TheStreet) -- Although airlines can be risky investments, and have recently been dogged by safety issues, now might be a good time to start buying stock in the industry.

Airlines are expected to see a record summer. More than 220 million passengers are expected to travel on U.S. airlines in summer 2015, a 4.5% increase from last summer. In the first quarter of 2015, the airline industry increased passenger traffic by 3.9%, in the U.S., while increasing revenues by 3.1%.

Since the deregulation of the industry starting in 1978, its profitability has been cyclical and volatile. For example, in 2001-2009, the industry lost $65 billion, while in 2010-2014, it has earned $22 billion.

So what are the best airlines investors should be buying? Here are the top three, according to TheStreet Ratings, TheStreet's proprietary ratings tool.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which airlines made the list. And when you're done, be sure to read about which biotech companies to buy now. Year-to-date returns are based on May 19, 2015, closing prices. The highest-rated stock appears last.

JBLU ChartJBLU data by YCharts
3. JetBlue Airways Corporation
( JBLU)
Rating: A

Market Cap: $6.8 billion
Year-to-date return: 37.1%

JetBlue Airways Corporation, a passenger carrier company, provides air transportation services. As of December 31, 2014, the company operated a fleet of 13 Airbus A321 aircrafts, 130 Airbus A320 aircrafts, and 60 EMBRAER 190 aircrafts.

"We rate JETBLUE AIRWAYS CORP (JBLU) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 3900.00% and other important driving factors, this stock has surged by 144.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JBLU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • JETBLUE AIRWAYS CORP 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, JETBLUE AIRWAYS CORP increased its bottom line by earning $1.19 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.19).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 3325.0% when compared to the same quarter one year prior, rising from $4.00 million to $137.00 million.
  • 37.16% is the gross profit margin for JETBLUE AIRWAYS CORP which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 8.99% is above that of the industry average.

ALK ChartALK data by YCharts
2. Alaska Air Group, Inc.
( ALK)
Rating: A

Market Cap: $8.7 billion
Year-to-date return: 12.1%

Alaska Air Group, Inc., through its subsidiaries, provides passengers and cargo air transportation services primarily in the United States. The company operates through Alaska Mainline and Alaska Regional segments.

"We rate ALASKA AIR GROUP INC (ALK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • ALK's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Powered by its strong earnings growth of 65.92% and other important driving factors, this stock has surged by 36.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALASKA AIR GROUP 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, ALASKA AIR GROUP INC increased its bottom line by earning $4.43 versus $3.59 in the prior year. This year, the market expects an improvement in earnings ($5.98 versus $4.43).
  • 35.46% is the gross profit margin for ALASKA AIR GROUP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.74% is above that of the industry average.

LUV ChartLUV data by YCharts
1. Southwest Airlines Co.
( LUV)
Rating: A+

Market Cap: $27.3 billion
Year-to-date return: -3.3%

Southwest Airlines Co. operates passenger airlines that provide scheduled air transportation services in the United States and near-international markets. As of December 31, 2014, it operated 665 Boeing 737 aircraft; and had 12 Boeing 717 aircraft.

"We rate SOUTHWEST AIRLINES (LUV) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins."

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

  • LUV's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SOUTHWEST AIRLINES 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, SOUTHWEST AIRLINES increased its bottom line by earning $1.65 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $1.65).
  • Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 69.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Net operating cash flow has increased to $1,452.00 million or 29.75% when compared to the same quarter last year. Despite an increase in cash flow of 29.75%, SOUTHWEST AIRLINES is still growing at a significantly lower rate than the industry average of 99.76%.
  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that LUV's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.

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