By Elyse Andrews
I’ve been traveling a lot lately, more than I have in quite a while. I sampled several airlines on my travels–JetBlue (JBLU), Delta (DAL) and United (UAUA) –and found them to have some very significant differences.
JetBlue was the best by far. With the free TV, free snacks, one free checked bag and large, comfortable seats, the flight went by very quickly.
Delta ranks second best, with free snacks, pleasant staff and free Wi-Fi (on some flights, not ours).
United was definitely the worst. The planes were cramped, they offered no free snacks and we had to pay for every checked bag. I doubt I’ll be choosing United again soon.
Howver, despite ranking last at the airport and in the sky, United’s stock, UAL Corp. (UAUA), has been doing quite well. It was featured in Cabot Top Ten Report in January, where Editor Michael Cintolo wrote:
“No one will argue that airlines make great investments over the long term, but in the short run, they can be fruitful. And right now, UAL Corp. and the entire airline group is in favor for two main reasons. The first concerns oil prices, generally one of the two biggest expenses for most airlines; while not hitting the skids, oil has been unable to decisively push through the $80 per barrel level, and now looks to be backing off. Any break below $70 would be bearish for oil (and bullish for airlines). Second, the economy is starting to rebound, which is leading to fuller flights and higher prices. Indeed, AMR Corp. hiked prices for domestic flights in recent days, and was followed by a handful of other players, including UAL. While the company’s financial numbers are a mess, analysts have been hiking their estimates for 2010 in recent weeks, and we think upside surprises are ahead.
“UAUA has closed three weeks in a row nearly unchanged, with shares trading in a tight range during that time. Those are bullish clues, especially given the market’s nosedive last week. Of course, in a weak market, good looking stocks can go bad in a hurry, but we like the set-up, and that UAUA’s advance is relatively fresh, as it only began its latest upmove in early December. We wouldn’t go overboard, but you could buy a little here or on weakness, with a stop around 11.5.”
Since that recommendation, UAUA has continued its upward trend and is now hovering below 20. I wouldn’t bet the mortgage on UAUA, but for Cabot Top Ten Report subscribers, it’s proven to be a profitable invesment.
Expanding my travel stock search outside of just airlines, I stumbled upon Priceline.com (PCLN), which looks better than UAUA long term and was also recently featured in Cabot Top Ten Report. Here’s what Editor Michael Cintolo had to say about the stock:
“Priceline.com, which pioneered the name-your-own-price travel booking system on its Web site, is making its 11th appearance in Cabot Top Ten Report and its first of 2010. The company reported blowout numbers last week–a 54% surge in fourth-quarter profit to $1.99 from $1.29 in the year-earlier quarter. Analysts had expected just $1.68, and thus the company continues a long tradition of beating estimates. The earnings beat came on a revenue jump from $406 to $541.8 million, beating analyst expectations of $529.8 million. The key to the performance was simple; international gross bookings rocketed 81% and hotel rooms booked climbed 60% worldwide. As the recession continues to abate and more people begin to travel again (58% of Priceline’s revenue is from Europe), this story has legs.
“PCLN topped at 144 in mid-2008 before bottoming in the fall of 2008, along with much of the rest of the stock market. But it erased that old high in August, and now it’s heading for its old high of 990 from 1999. Now, we know that some investors are reluctant to pay more than $100 for a share of stock; after all, there are so many cheaper ones available. But our advice is to avoid confusing price with value. Institutions don’t think twice about the price of a stock, and neither should you. PCLN is a well-managed company, and this breakout is a great buy signal.”
Disclosure: No positions