Dec. 23, 2014, 7:25 PM
- It’s pretty clear why many energy stocks are hurting amid falling crude oil prices, but Morgan Stanley has researched across industries to determine some less clear-cut winners and losers.
- Airlines consume huge amounts of fuel, but the firm says American Airlines (NASDAQ:AAL) and Allegiant Travel (NASDAQ:ALGT) should benefit more than most from lower oil prices since they do not hedge the price of fuel to reduce price volatility.
- Among autos, Tesla (NASDAQ:TSLA) draws concern because "lower-for-longer oil certainly hurts the case for mass-market adoption of electric vehicles.”
- Since lower gas prices should reduce shipping costs, Stanley sees the benefit trickling into Q1 per-unit shipping costs at Amazon (NASDAQ:AMZN).
- The firm likes Monster Beverage (NASDAQ:MNST) on the idea that Americans getting cheaper gas might be more ready to splurge on energy drinks, and gas stations and convenience stores account for 75% of MNST’s sales.
- Among apparel companies and retailers, Stanley likes brands that are most popular with lower-income consumers, who they believe are most likely to put the money they save into new purchases: PLCE, FL, FINL, BWS, SKUL, ARO, BURL, ROST.
Dec. 23, 2014, 10:06 AM
- The type of hedging strategies used by airliners will play a big part in profitability in the sector after the sharp drop in jet fuel prices.
- Delta Airlines (NYSE:DAL) estimates it keeps about 65% of the drop in fuel costs, but will owe $800M to counterparties (the other side of the hedge) if oil is 20% lower on December 31, 2015 from where it stood on October 1, 2014. By Delta's estimation, a penny drop in oil prices is a net $40M to the good side.
- Southwest Airlines (NYSE:LUV) forecasts it will reap $0.80 for every $1 drop in oil prices, but disclosed a $615M liability to creditors if crude oil prices stay below 25% from the level of September 30.
- American Airlines Group (NASDAQ:AAL) will realize the full impact from the drop in fuel costs on its bottom line due to the decision by the company not to hedge at all.
- Other airliners could also have some hedging exposure, although details are light on the strategies employed in the sector.
- What to watch: Q1 reports and conference calls in the sector could be key in filling in some of the blanks. Related stocks: UAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
Dec. 22, 2014, 10:19 PM| Comment!
Dec. 15, 2014, 3:14 PM
- Senator Charles Schumer calls on the DOT to probe the airline industry for the high level of airfares despite the drop in jet fuel costs and booming airliner profits.
- By most tabulations, airfares have held steady over the last few weeks.
- Previously: IATA: Profits to rise 26% for airliners in 2015 (Dec. 10 2014)
- U.S. carriers: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
Dec. 10, 2014, 8:36 AM
- IATA forecasts airline profits will rise 10.6% Y/Y to $19.9B this year.
- The outlook from the research firm for 2015 is for 25.6% jump in profit to $25B.
- Consumers can expect to see a 5.1% decline in airfares next year, while cargo shippers should pay 5.8% less.
- On a per-passenger basis, IATA thinks the the airline industry will show a net profit of $7.08 in 2015 vs. $6.02 in 2014 and $3.38 in 2013.
- The profit gains are tied to lower oil prices and improved GDP numbers across key sections of the globe.
- Airline stocks: AAL, UAL, DAL, RYAAY, OTCPK:CPCAY, OTCPK:SINGY, CEA, ZNH, CPA, GOL, LFL, OTCPK:DLAKF, AIDIF, OTCPK:QUBSF, JBLU,ALK, HA, OTCPK:AIRYY, OTCPK:MLYAF, OTCQX:AFLYY, VLRS, LUV, RJET, SAVE, ALGT, VA.
Dec. 8, 2014, 7:32 AM| 7 Comments
Dec. 5, 2014, 9:32 AM
- Allegiant Travel (NASDAQ:ALGT) reports revenue passenger miles increased 9.8% to 579.49M in November.
- The carrier increased its load factor by 110 bps to 85.6% as it flew 13% more passengers than a year ago.
- Guidance: Allegiant sees a 11%-13% increase in departures in Q4 and 9%-11% boost in available seat miles.
Dec. 3, 2014, 5:09 PM
Nov. 29, 2014, 10:29 AM
- Analysts with Gasbuddy.com predict some gas stations in the U.S. will offer $2 per gallon gas by Christmas.
- The last time the average price of gas in the U.S. was below $2 was in March of 2009.
- Forecasts from economists vary widely on the overall gas benefit to consumers for Q4. The high end from the group is an outlook of $300 per household, while the low end is closer to $100.
- Most analysts see an immediate lift for retail chains with large distribution channels. Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Costco (NASDAQ:COST), Dollar General (NYSE:DG), Family Dollar (NYSE:FDO), Dollar Tree (NASDAQ:DLTR), Big Lots (NYSE:BIG), and Five Below (NASDAQ:FIVE) come to mind.
- Airline stocks (JBLU, DAL, UAL, LUV, AAL, RJET, ALK, HA, ALGT, VA) have already ripped strong gains off the OPEC news, although some see even more long-term upside as forward fuel hedges get reworked.
- A sustained period of low gas prices should lift restaurant stocks (CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN) say some analysts.
- The gaming sector is (CZR, PNK, BYD, ISLE, CNTY, MCRI, MGM, NYNY) also an off-the-radar pick to bounce.
Nov. 28, 2014, 8:13 AM
- The OPEC decision to hold oil production levels steady has put a charge into airline stocks in early trading off the prospect for sustained lower jet fuel costs.
- Delta Air Lines (NYSE:DAL) is up 4.1% premarket and United Continental (NYSE:UAL) has already rallied 3.5%. The rest of the group is expected to fall suit.
- Airline stocks on watch: JBLU, AAL, LUV, ALGT, SAVE, HA, ALK, SKYW, VA.
Nov. 20, 2014, 9:12 AM
- Air fares rose 2.2% M/M in October, according to the underlying data from the Bureau of Labor Statistics. The development arrives just as jet fuel prices are moderating on forward contracts for carriers (LUV, JBLU, HA, ALK, ALGT, SAVE, AAL, DAL, UAL, RJET).
- Breakfast cereal prices rose 1.5% M/M in October. Though the gain could be due to a soft promotions-influenced comp from a year ago, sellers (GIS, K, POST) won't mind the relief.
- Another surprise might be the +4.3% average price rise in the women's dresses category. Ann (NYSE:ANN), L Brands (NYSE:LB), Cache (NASDAQ:CACH), Cato (NYSE:CATO), Chico's FAS (NYSE:CHS), and Ascena Retail (NASDAQ:ASNA) could be part of that improvement.
- BLS CPI table
Nov. 5, 2014, 12:06 PM
- U.S. airliners aren't losing their grip on capacity control in the face of falling oil prices, say Imperial Capital analysts covering the sector.
- They note American Airlines reduced capacity in both January and February by 4% which should have a carry-over effect on pricing in many markets.
- "We expect legacy peers to by and large follow American’s lead in maintaining or even decreasing capacity despite more favorable fuel prices," writes IC.
- Regional carriers: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET.
Oct. 24, 2014, 3:19 PM
- Cowen Research says Q3 earnings and guidance from airliners have surprised to the upside.
- The positive comments from airliner management on PRASM and costs coincides with some share price loss in the sector over Ebola fears.
- Q4 margins are forecast to expand as lower fuel prices factor in.
- Domestic airline stocks: DAL, AAL, JBLU, UAL, ALK, HA, RJET, ALGT, LUV, SKYW, SAVE.
Oct. 22, 2014, 4:05 PM| Comment!
Oct. 21, 2014, 5:35 PM
- ACTG, ALB, ALGT, AWH, BCR, BDN, CA, CAKE, CLB, CLGX, CLW, CTXS, CVA, EEFT, EFX, EGHT, FTK, FTNT, GGG, IBKC, INFN, LEG, LHO, LOGI, LRCX, MKSI, MKTO, MLNX, MSA, NOW, NXPI, ORLY, OTEX, PLCM, PLXS, RE, RJF, SCSS, SFG, SGMO, SHLM, SKX, SLG, SLM, SUSQ, T, TAL, TCBI, TER, TILE, TMK, TSCO, TYL, USTR, VAR, WFT, YELP
Oct. 21, 2014, 1:12 PM
- Airline stocks are putting in another volatile day as the Ebola headlines veer toward the positive side.
- Gainers: Spirit Airlines (NASDAQ:SAVE) +5.0%, American Airlines Group (NASDAQ:AAL) +5.3%, Southwest Airlines (NYSE:LUV) +4.7%, SkyWest (NASDAQ:SKYW) +4.1%, United Continental (NYSE:UAL) +2.9%, Delta Air Lines (NYSE:DAL) +2.5%, Allegiant Travel (NASDAQ:ALGT) +1.9%, JetBlue (NASDAQ:JBLU) +2.3%, Alaska Air Group (NYSE:ALK) +1.9%.
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