4 Top-Performing Airline Stocks With Strong Futures

Includes: ALGT, BA, DAL, UAL
by: James Hartje

Allegiant Travel Company (NASDAQ:ALGT)

Allegiant Travel Company has been one of the top-performing stocks over the past year and a surprise to everyone. Up over 80% since last August, the stock has shocked many investors. While there was no doubting Allegiant, as investors alike thought it was a well-run company and a solid stock with much room to grow. However no one could have expected an 80% jump.

Going forward, there is still plenty of room for the company to grow. It is still in the early stages of expanding and has a good, effective business model targeting smaller cities across the U.S. that many major airlines tend to ignore. If this sounds familiar to you, it's the same concept Wal-Mart Stores, Inc. (NYSE:WMT) was founded on, as it was the pioneer concentrating on markets that other retailers ignored. With presence currently in 64 cities across the U.S., Allegiant plans to continue to grow rapidly, most recently adding flights to Hawaii.

Over the course of the past five years, the company's earnings have grown at a rate of 38%, an impressive number when you factor in the fact that most of the industry is losing money. We expect those numbers to continue as Allegiant is backed by strong analyst coverage as well, with 16 analysts currently covering the stock. Its recommendations are broken down as: 5 Strong Buy, 5 Buy, 5 Hold, & 1 Underperform. Deutsche Bank was the most recent bank to upgrade the stock to a Buy basing its analysis on Allegiant's growing market and the ability to acquire new loyal customers.

The Boeing Company (NYSE:BA)

Boeing is one of the top aerospace and defense companies and has been a safe and steady stock to own throughout 2011 and 2012. Soaring over 40% in 2010 and 2011, Boeing has slowed down a little, but nevertheless has been a steady riser gaining close to 16% over the course of the past year. Going forward, we like Boeing and expect the stock to continue to steadily rise with a strong outlook ahead, bullish analyst coverage, and upbeat expectations. We don't expect this trend to stop anytime soon, as pegged against its PEG ratio, the stock is relatively cheap. Huge contracts on the way, strong book, and excellent cash flow all bode well for Boeing, and We expect it to rise to $95.

Delta Air Lines, Inc. (NYSE:DAL)

Delta, like Allegiant, has been one of the biggest winners and surprises over the past year. Delta soared over 60% since last August, and has been one of the great success stories making such a strong comeback after its shaky past, dealing with bankruptcy and restructuring issues, and failing to become relevant in a tough industry. Well it is relevant now!

We don't expect the stock to duplicate its amazing past yearly performance, though we're still confident investors will see nice steady gains. The stock is relatively cheap compared with the rest of the sector, making it a good potential investment. Along with that, the business from top to bottom is solid, holding a PEG ratio of 0.12 and it has a lot of great things going for it—paving the way to a great 2012 second-half performance.

United Continental Holdings, Inc (NYSE:UAL)

United Continental Holdings has been one of the top investments over the past year, up close to 45%. A lot like Delta Airlines, United Continental Holdings has been another airline stock working to once again make itself relevant after going through bankruptcy and restructuring issues. The stock has emerged once again and in a strong fashion, reinventing itself and becoming relevant again. A lot of the stock's past year performance can be attributed to its very favorable projected earnings ratio. Analysts are upbeat about the future, with optimistic views and consensus buy recommendations all around. With the worst of its problems now over and upbeat expectations, we expect United Continental Holdings to continue to perform well throughout this year and into the next as well.

Disclosure: I am long ALGT, BA, DAL.

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