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For many years airlines have been a no-go zone for growth investors.

But that may be changing. For 2012 investors in US Air (LCC) have seen gains of 150%. Some of that is on speculation the company will get AMR out of bankruptcy, but money is money. Among "conventional" airlines Delta (NYSE:DAL) has delivered a 32% gain, Southwest (NYSE:LUV) a 17% gain and even United-Continental (NYSE:UAL) is up 13%.

Taking a narrower view of time lines, leadership varies. Go back six months and LUV looks like a winner. Go back three months and it's DAL. Go back a month and it's LUV again. Go back a week and it's DAL. It's a horse race.

Delta has been especially favored lately thanks to the pay-off on its Philadelphia refinery buy, described by stockholder Adam Levine-Weinberg last month, and by its willingness to spread the wealth to shareholders, as CEO Richard Anderson described it yesterday. If Anderson hits his 2013 targets you're talking about earnings of nearly $2/share on a stock that's now barely holding $11. And if that he hands out even one-quarter of that to shareholders there's an implied 2013 yield of about 5%.

I wrote bullishly about Delta just this week, focusing on its purchase of 49% of Virgin Atlantic. Longer flights are inherently more profitable than shorter ones, international flights more profitable than domestic ones, and the deal puts Delta in a good position. The poor economic health of Delta and the other airlines in global competition is reminescent of the old story about the two men running from the bear. The punch line is "I don't have to beat the bear. I just have to beat you."

Southwest, meanwhile, has been running at just break-even all year. The company suffered a drop in traffic in November, and its strategy of short flight turnarounds is starting to look tired, given Delta's international profile. But there is reason to believe that 2013 could be much brighter, given recent falls in fuel costs, and the expectation that could continue into the new year.

All the airlines have been cutting capacity and now most planes are full. All the airlines have been able to push through price increases regularly for the last few years, and with AMR's bankruptcy there seems to be labor peace. I would expect rising prices across the sector over the next six months at least, barring another fuel price shock, and put the chance of that at less than 10% through 2013. If you want a fast profit, look to buy options on Delta at prices up to $13/share, and LUV at prices to $12/share. If you want dividends Delta looks like a good bet on yield, and if you want "action" consider LCC.

Source: Time To Buy Airlines?