NEW YORK (TheStreet) -- American Airlines Group (AAL) replaced Con-way (CNW) in the Dow Jones Transportation Average last week. Positive looking charts for AAL should help give some lift to the second part of Dow Theory.
Earlier this year, AAL was stuck in roughly a $10 trading range between around $46 to $56. Prices broke down in May, but a new uptrend has just been established. We now have a low in August and a higher low in October, along with higher highs for AAL in September and October.
AAL has rallied above the 50-day moving average and is poised to break above the 40-week moving average in the chart, above. If we don't get any cancelled flights, we could see AAL rally back into overhead resistance in the $50 to $55 area.
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 multiple strengths, 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, notable return on equity, good cash flow from operations and compelling growth in net income. 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:
- Powered by its strong earnings growth of 56.21% and other important driving factors, this stock has surged by 35.74% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in 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 ($11.86 versus $2.79).
- 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. Despite an increase in cash flow, UNITED CONTINENTAL HLDGS INC's average is still marginally south of the industry average growth rate of 19.97%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.0%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: UAL