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Growth is good because it increases earnings meaningfully and lets the current P/E ratio go down. This is the reason investors pay 20, 50 or even 100 times of earnings for an investment. But you really make money if you buy a stock that beats analyst expectations and generates additional growth fantasies. Let’s take a look into the airline industry, an industry I had analyzed by the best yielding airline stocks.

I shall now analyze the airline industry by growth stocks. My first requirement is that the 5-year sales and earnings per share growth should be above 10 percent. Further, the company should have additional growth potential, measured by a positive expected 5-year EPS growth. Finally, the growth should create value. This fact is covered by the ratio return on investment (ROI). The ratio shows how efficiently a company converts its debt and equity into profits. I decided to screen only stocks with a ROI of more than 5 percent. Here are the results:

1. Copa Holdings (CPA) is located in Panama. The company has a market capitalization of $2.8 billion, generates revenues in an amount of $1.6 billion and a net income of $302.0 million. Its trailing P/E ratio is 9.3 and forward price to earnings 8.7, Price/Sales 1.7 and Price/Book ratio 2.4. Dividend Yield: 2.6 percent. The company grew 18.4 percent in sales and 23.1 percent in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 10.3 percent. The ROI is 15.4 percent.

2. Allegiant Travel (ALGT) is located in the USA. The company has a market capitalization of $928.0 million, generates revenues in an amount of $719.3 million and a net income of $54.3 million. Its trailing P/E ratio is 17.2 and forward price to earnings 12.9, Price/Sales 1.3 and Price/Book ratio 2.8. Dividend Yield: 1.5 percent. The company grew 38.0 percent in sales and 43.0 percent in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 8.0 percent. The ROI is 12.9 percent.

3. LAN Airlines (LFL) is located in Chile. The company has a market capitalization of $7.3 billion, generates revenues in an amount of $4.4 billion and a net income of $419.7 million. Its trailing P/E ratio is 17.3 and forward price to earnings 14.3, Price/Sales 1.7 and Price/Book ratio 5.4. Dividend Yield: 0.8 percent. The company grew 11.9 percent in sales and 20.3 percent in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 22.6 percent. The ROI is 9.5 percent.

4. Hawaiian Holdings (HA) is located within the USA. The company has a market capitalization of $212.0 million, generates revenues in an amount of $1.5 billion and a net income of $51.9 million. Its trailing P/E ratio is 4.3 and forward price to earnings 5.0, Price/Sales 0.2 and Price/Book ratio 0.9. Dividend Yield: 0 percent. The company grew 20.8 percent in sales and 38.0 percent in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 4.0 percent. The ROI is 7.2 percent.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 4 Fastest-Growing Airline Stocks