NEW YORK (TheStreet) -- American Airlines Group (AAL) shares are up 3.37% to $42.96 in early market trading on Monday following a Barron's report Saturday suggesting that airline stocks could gain by as much as 50% in a year.
The report stated that the big four airline companies, American, Delta Air Lines (DAL), United Continental (UAL) and Southwest Airlines (LUV), could rise between 15% and 50% in a year.
This optimistic outlook is due to falling jet fuel prices due to the global supply glut of crude, economic growth and lessons the industry has learned about the negative impact of increasing capacity too quickly.
"Fortunately for American, its policy of not hedging fuel costs has won it the biggest savings of the group -- about $4 billion a year. Management has scaled back plans for capacity additions and delayed some plane orders. That puts the company in an excellent position to retire high-interest debt and buy back shares for a song," said Barron's writer Jack Hough.
The report estimated that American will save about $4 billion on fuel a year.
TheStreet Ratings team rates AMERICAN AIRLINES GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN AIRLINES GROUP INC (AAL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."