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American Airlines, Matador Resources Will Take Flight Says Hodges Fund Manager

Wall Street analysts covering American Airlines (AAL) better get their erasers ready because the drop in fuel prices will soon have them raising their earnings estimates.

Wall Street analysts covering American Airlines (AAL) better get their erasers ready because the drop in fuel prices will soon have them raising their earnings estimates, said Craig Hodges, portfolio manager for the Hodges Small Cap Fund. 'In May the price of jet fuel was $1.90 and now its $1.46. That’s the major component of an airlines cost so you are going to see upward revisions in earnings,' said Hodges. Shares of American Airlines are down 18% thus far this year. The Hodges Small Cap Fund is up nearly 3% so far in 2015. Hodges is also bullish on rail-car and highway divider-maker Trinity Industries (TRN). Shares of Trinity Industries have risen slightly more than 1% year-to-date. 'Trinity has had two quarters in a row where they have beaten expectations and raised estimates and the stock has not done anything,' said Hodges, adding there is big insider buying in what he calls a 'very inexpensive stock' trading at less than 7 times next year’s earnings. He is also positive on shale play Matador Resources (MTDR), which has seen its shares jump almost 12% so far in 2015 despite the lingering problems in the energy sector.