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Steve Hach is the Senior Editor at ValuEngine.com, a Newtown, Pennsylvania-based stock valuation and forecast service. ValuEngine utilizes Ivy League financial research as the basis for its coverage of more than 7000 US, Japanese, and Canadian, and other foreign stocks. Hach utilizes... More
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  • ValuEngine.com Rates Airline Stocks by One-Year Forecast Returns 0 comments
    Jun 23, 2011 2:22 PM | about stocks: AAL, LFL, LUV, RYAAY, JBLU
    Good News and Bad News

    ValuEngine.com Rates Airline Stocks by One-Year Forecast Returns

    Markets are down today on a variety of bad economic news. In addition, oil prices are down big after a decision to release 60 million barrels of crude from strategic reserves--30 million of which will come from the US--in order to deal with the ongoing crises in the Middle East and the resultant disruptions in supply. This moves undercuts OPEC's refusal to increase production a few weeks ago.

     

    Some stocks rallied on this news and none were better positioned to profit from lower oil prices than those in the fuel-dependent Transportation Sector. Over the past few years, we have seen a roller coaster ride for Airline Industry stocks as they have dealt with both recession and wild swings in fuel costs. Those prescient enough to lay on some fuel hedging strategies--such as Southwest--were recently challenged as their initial moves expired and they began to deal with the vagaries of the market once more.
     

    So, it should be no surprise that today's drop in oil prices lead to a rally for the airlines in the midst of broader carnage Lower fuel costs combined with the various "revenue enhancements"--baggage fees, cancellation fees, food fees, etc--and better route/capacity management on the part of most carriers over the past few years should further boost the bottom line for airlines. 


     

    One of the most powerful features of ValuEngine is the ability to screen our universe of more than 5500 stocks with a huge variety of criteria. Using both our website and our Institutional software package (VEI), subscribers may design their own screens to identify investment targets. For today's bulletin, we queried our software package using some liquidity criteria and then asked it only to provide results from the Airline Industry. Below, we present the top five airline stocks ranked by One-Year Forecast projections.



     

    Ticker

    Name

    Mkt Price

    Valuation (%)

    VE Rating

    Last 12-M Retn(%)

    Forecast 1-Month Retn(%)

    Forecast 1-Yr Retn(%)

    P/E Ratio

    AMR

    AMR CORP

    5.75

    -44.56

    5

    -27.4

    2.9

    25.46

    N/A

    LFL

    LAN CHILE-ADR

    27.44

    8.59

    4

    45.26

    1.5

    8.89

    21.93

    LUV

    SOUTHWEST AIR

    11.02

    -25.74

    4

    -7

    1.84

    5.16

    15.88

    RYAAY

    RYANAIR HLDGS

    29.79

    -10.71

    4

    18.73

    1.92

    5.12

    15.95

    JBLU

    JETBLUE AIRWAYS

    6.07

    -16.9

    3

    1.42

    1.21

    3.06

    19.52

     

    MARKET OVERVIEW

    Summary of VE Stock Universe

    Stocks Undervalued

    56.64%

    Stocks Overvalued

    43.36%

    Stocks Undervalued by 20%

    24.83%

    Stocks Overvalued by 20%

    15.53%

     

     SECTOR OVERVIEW

     

    Sector

    Change

    MTD

    YTD

    Valuation

    Last 12-MReturn

    P/E Ratio

    Aerospace

    -0.13%

    0.29%

    11.75%

    0.06% undervalued

    28.53%

    18.39

    Auto-Tires-Trucks

    0.38%

    -1.20%

    -10.95%

    6.09% undervalued

    43.74%

    18.87

    Basic Materials

    0.00%

    -4.17%

    -8.63%

    8.25% undervalued

    42.97%

    34.35

    Business Services

    -0.71%

    -2.55%

    5.59%

    0.93% undervalued

    16.55%

    26.89

    Computer and Technology

    -0.49%

    -5.01%

    3.10%

    5.01% undervalued

    28.91%

    36.97

    Construction

    -0.29%

    -6.47%

    -11.39%

    7.63% undervalued

    2.41%

    28.33

    Consumer Discretionary

    -0.96%

    -3.67%

    -0.32%

    2.87% undervalued

    22.07%

    30.98

    Consumer Staples

    0.19%

    -2.81%

    -7.80%

    0.33% overvalued

    15.26%

    31.47

    Finance

    -0.65%

    -2.03%

    -0.32%

    3.30% undervalued

    9.44%

    27.54

    Industrial Products

    -0.20%

    -0.34%

    -0.23%

    5.73% undervalued

    29.34%

    28.23

    Medical

    -0.73%

    -4.63%

    9.84%

    4.79% undervalued

    17.85%

    29.69

    Multi-Sector Conglomerates

    -0.55%

    -1.98%

    -0.28%

    19.16% overvalued

    29.06%

    25.2

    Oils-Energy

    0.41%

    -5.08%

    -3.75%

    17.54% overvalued

    35.67%

    54.9

    Retail-Wholesale

    -0.77%

    -1.83%

    3.02%

    1.36% undervalued

    26.42%

    34

    Transportation

    -0.53%

    -3.10%

    -6.78%

    3.68% overvalued

    16.83%

    20.43

    Utilities

    -0.63%

    -2.11%

    2.92%

    4.07% overvalued

    22.48%

    23.4

     

     

    Themes: airlines Stocks: AAL, LFL, LUV, RYAAY, JBLU
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