Are Airline Stocks Cheap Stocks To Buy Now!?
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Look at the sky, is that a bird? Is that superman? No its just all the beaten down airline stocks! We are talking about how bad the airline stocks are beaten down in the stock market. I will talk about how bad the airline stocks numbers were and I will get in depth about if these are stocks to buy now. I will talk about if I’m interested in any of the airline stocks and if I am, which stock would I buy?
Hope you enjoy this video in which I give my own personal opinion about the airline stocks and which one these stocks are a good opportunity in the stock market right now. But I wanna know your opinion on these stocks, do you think the airline stocks are a buy right now? Leave me a comment on your opinion these stocks. Or let me know of any stocks you are buying now. Or of any stocks you are watching now.
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Well, where do we even start with this one look at the stock Southwest Airlines down 27% year to date. 27% on a one year look at Delta Airlines down 45.67% year to date.And for the one year down 40.77% American Airlines down 57.39% year to date and down. 56.77% one year,
Hawaiian holdings down 55.72% year to date one year down 54.49% Alaska Air Group down 43.91% year to date and down 43.56% one year Spirit Airlines oh my gosh, that stocks almost as cheap as their flights look at this one year to date down 59.81%.
And on a one year down 56.09%. United airline holdings down 59.97% and on a one year down 59.8%. And oh my goodness, guys, that was a lot to go through looking at those stock charts that was at knockout. Okay. But when I see all those stock prices down massively year to date, and over the past one year, it makes me think are there buying opportunities in the airline space.
And I think it’s an interesting time to look at these stocks because a lot of these stocks are still very beaten down. They’re off their lows, but they’re still very beaten down and we’re getting a little more clarity around like how scary Rona is or is and now versus I mean, if you bought these stocks at the lows, they were like six months ago.
Respect okay, but that was a crazy time to buy because we had no clue how bad Ronnie was going to get and if any of these airlines would even exist, okay, we were just like like that was a crazy time period right?
They were talking about I mean, if you go back six months ago, they were talking about death percentages of like 7% for their own right obviously we’re getting different numbers in that that are much much lower.
So it’s less scary than it’s been in the stocks are still heavily beaten down. And so we got to ask ourselves all these stocks to buy now the airline stocks are they Stocks to Buy Now we’re going to look at this in depth, okay.
And we’ll talk about if I’m interested in actually buying anything in the airline space, like what stocks are the most interesting to me from a risk reward standpoint, and what would I do with my money in this scenario, hope you guys enjoyed today’s video.
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I know we have an airline section in there, we can just talk about airline stocks if you want Okay, and pretty much every stock out there. Alright, we’re I want to get started with this video here. Today we’re gonna look at TSA checkpoint travel numbers from 2020 in 2019.
And we’re going to see where these numbers are at. Okay, this is an official website for the Department of Homeland Security. So let’s go back in time to march 1 in March 2 of 2020.
This was when the rumors were kind of starting about Roni and you heard some stuff around China coming out and all man and so people started to kind of know about this, a few people started kind of slowly pulling back on travel right.
And it was kind of like this little start there. And numbers already started to weaken essentially. Okay, you look at March 1, it was 2.2 8 million passengers versus 2.3. The previous year, the next day down to 2.08 9 million passengers versus a previous year was at 2.25 7 million passengers.
Okay, so it already had started. But let’s fast forward a month and you would have thought the apocalypse happening okay. Look at this. Down to look at this April 1 2020 136,000 passengers total in the United States traveled that day versus 2.1 million plus in that same day, a year ago.
That’s extraordinary. Look at April 2 2020 124,000 passengers versus 2.4 million for that same day in the previous year, though, I mean numbers had dropped well over 90% I mean, basically if you were flying in March in basically the back half of March or at any point April, you’re only doing it out of basically necessity okay. I mean that is extraordinary.
it you know, you could have never thought that drop off was ever possible. And then a once in 100 year event, absolutely. Unreal. Okay. And then look at one month later, it’s not like it got a lot better rate may 1 may 2 171,000 passengers 134,000 passengers right versus 2.5. nucleon passengers and almost 2 million passengers those same days the previous year.
I mean, my goodness, guys, that’s absolutely extraordinary. we fast forward a month, and hey, we’re starting to get somewhere more passengers are flying. Okay. 353,000 flew on June 1 267,000, flew on June 2, that’s still versus 2.5 million 2.2 million.
So still down like 80 90%. Right. But hey, it’s better than it was right? It’s, it’s better than it was. But then all sudden, in July, we see a clear spike up in in travel compared to where we were at 626,000 passengers travel July 1, July 2 764,000. Passengers travel that’s versus 2.5 million and 2 million.
So you know, numbers still down massively, but you’re you’re on the right track, you’re getting more and more passengers each and every month over a month, essentially. Okay. And then we see some consistency, right. 709,000 passengers traveled August 1, nearly 800,000 passengers traveled August 2, that’s vs 2.3 million, 2.6 million.
So things are starting to get consistent, right. But then we get a real drop off in September, down to 516,000 passengers and 578,000 passengers in September from 2,000,001 point 8 million. So it’s kind of like a real drop off there. But let’s fast forward to today. And look at that. Okay, we’re at, you know, basically the 11th October 11 984,000 passengers.
And yesterday, the 12 958,000 passengers. Now, that’s still down about 60 70%. year over year, right? I mean, you know, we’re still down around those numbers, roughly. So it’s still awful right versus 2.5 million 2.6 million, same days, a year ago.
So no doubt, we’re still down massively. However, the numbers are trending in the right way. If you’re looking at airline stocks, right, then you care about these stocks at all. So the moral of the story is, numbers are still awful, okay, numbers are still awful, they’re getting better, but they’re still awful.
Now, we should expect them to get back over a million a day consistent in 2021. Remember, we’re already starting to push up close those numbers. So as this year kind of continues on the rest of 2024. That way, these last, you know, two, three months, and then we push into 2021, I would expect we’ll get back to a million plus a day consistently in 21.
And the possibility of getting to 1.5 million plus a day, and three Q and four q or 21, which would be massive for all the airline players out there. Because if that happens, these players actually might be able to go profitable, okay, at least break even if not profitable, that would be massive in 2022,
we might actually be able to push up close to those 2 million a day type numbers. Now keep in mind, we might never get back in terms of airline industry, how many people were flying, we might never get back to 2019 numbers, we’ll see what happens over time.
But it’s possible we never get back there. Because remember so many more companies. And remember a lot of people that fly right or for business right? in countless companies and companies all over the United States and internationally have also learned how to do their business virtually.
So there might never be as much need for flying as there once was okay, doesn’t mean numbers can’t come back quite substantially. And maybe get within let’s say 10% of those travel numbers like they used to be, they might never get there.
But they can get back to a point where they’re like 2 million a day, if not a little over 2 million day by 2022. Okay, so that would be very good news. Now we got some very interesting information just a few hours ago in regards to how are these airline players actually doing because delta reported their earnings.
Delta Airlines, q3 loss misses views, but cash burn slows. Delta Airlines on Tuesday reported a third quarter loss that was deeper than forecast, though its cash burn rate improved further.
Okay, that’s good sign. Delta stock fell along with others in the airline space Wall Street expected delta to report a per share loss of $3.10 as revenues fell 75% year over year, my goodness per share loss of $3.30 on revenue of 3.0 6 billion daily, this is what’s really important. Okay, daily cash burn average $24 million for the quarter, okay?
And that’s per day, by the way, with an average of 18 million for the month of September. Alright, and that’s daily cash burn, okay, so it’s every day they’re losing that much money literally. Okay. But if you look at that trend, it’s improving 24 million now down to 18 million.
And keep in mind that’s down from cue two’s average burn rate of $43 million per day. That’s ridiculous. Imagine losing $43 million per day. That’s what Tesla’s short sellers feel. At the end of q3. The company had $21.6 billion in the But that’s good news.
That’s up from 15 point 7 billion at the end of q2. So that’s really good news. Also, this is really big. They’re talking about for q4 cash burn leads to CEOs talking about cash burn of 10 to 12 million. So if you’re looking at all this, it’s really good progress.
I mean, it’s still awful. They have to, you know, lose money and not make money, right. But the cash burn is less and less and less. And if you’re thinking about this from an investment standpoint, and how do you make money on stock like this, this is a good sign, okay, you want that cash burn to continue to come down and down down.
The lower that cash burn gets, the closer you are to break even closer to breakeven, the closer you are to profitability, delta has reduced aircraft purchase commitments by more than $2 billion in 2020. And by more than 5 billion through 2020. It will also accelerate retirements of nearly 400 aircrafts by 2025. including more than 220 20. That’s no bueno for Boeing.
As far as the all those cancellations in purchase commitments, okay, you know, reduced by 2 billion, then reduced by 5 billion through 2022. Yeah, that’s just no good for Boeing, because I can almost guarantee you all those planes.
Were going to be made by Boeing, essentially. All right, Boeing has a long way to climb back right now think about how fast things have turned. This was just this year, delta reported adjusted earnings of $1.70. Compared to analysts were expecting $1.40 strong travel demand and cheaper fuel helped boost Delta’s bottom line.
This was just this year ties in 2020. Again, look at this, a company had reported net income of $1.1 billion in that quarter. absolutely extraordinary. The company on that earnings, right in January, the airline reiterated his 2020 guidance on earnings per share of $6.75 to $7.75.
And now, who would have thunk it? Okay, not only would the company not even be remotely close to those numbers, but the company’s probably going to lose about $10 per share in 2020. I mean, who would ever that’s how fast things can change when you have such a crazy dramatic situation like the Roni, Rona come out of nowhere.
Okay. Now, this is very key. Okay, this is a very key member talked about that cash burn, they’re talking about getting down to 10 to 12 million soon. But this is very key, the carrier could break even, and even turn cashflow positive. In spring of 2021, the CEO said, that is big, okay, you have a lot more visibility.
If you’re a CEO of one of these airlines, it’s not clear visibility, you don’t know if Ron is going to spike back up huge or anything like that.
But you’re kind of watching everything that’s going on, you’re kind of watching these trends in your business bill. And it looks like a CEO believes the company will be able to get back to breakeven, or even turn cashflow positive in the spring of 2021.
So that’s massive news. And if you’re thinking about this from an investment perspective, as another big thing, that’s probably really, really, really good news.
Okay, so let’s assume for a minute, the, you know, delta and a lot of these airlines, let’s assume they break even, or maybe even start making a profit, but let’s just say they breakeven by the spring, summertime of 2021. Okay, that would mean essentially, Wall Street is likely going to pile in these stocks.
In the next six to 15 months, I would say, okay, so 2021 Wall Street’s gonna pile in this wise Wall Street gonna pile in a lot of these stocks in 2021. Well, if these companies get back to break even, or start making profits, obviously, in 2021, Wall Street’s gonna pile in, because they’re gonna say, well, big profits are gonna start coming in pouring in again in 2022.
And guess what would probably come back at that time, probably dividends, again, which a lot of people love these and a lot of Wall Street loves these airline stocks, because they’re cash flow machines, and they usually throw off a lot of dividend money. Okay.
And so Wall Street’s gonna, Wall Street wants to be in ahead of that, essentially. So they’ll they’ll start jumping in big time in 2021. If this is a scenario that plays out, in my opinion, okay, so I gotta say, guys, the airlines actually looked like a dang opportunity.
I never thought I would ever have the day when I said airlines looked like an opportunity. I’ve never bought an airline stock in my life. Okay. never bought an airline stock in my life, but it’s actually these stocks are actually in up here. Okay. It’s actually pretty interesting risk reward with what what type of visibility we have.
So let’s say hypothetically, I had $10,000. Would I put all that $10,000 into one of these socks? Which sock would I pick? When I divide the money up? What would I do? Or just put it all in one stock? Well, no, okay, I would not just put all $10,000 if I wanted to put you know, let’s say invest $10,000 in a space, I would not put it all in just one stock.
Here’s what I would do. I would divide the $10,000 into four airline stocks. I would hold these for airline stocks and I’ll go over which ones I would personally buy. I will hold them for one to two years, then I would go ahead and sell out of these airlines. I really don’t want to be an airline’s long term. Okay.
I would hold them for one to two years and I would put my money into this everything In relation to the airline industry, and I think the timing could kind of be perfect if everything kind of works out in this whole scenario. But let’s first go through these four airline stocks that I would actually buy where we divide up the money. Okay, so the first one, by Southwest Airlines,
I put $2,500 in Southwest Airlines ticker symbol love. This is just, I mean, I think it’s the creme de la creme of United States of America airlines out there. I just don’t think there’s anything above Southwest Airlines, I think their customer service is the best.
I think their management team is about the best you can get. I’m putting $2,500 there. Okay, then I’m putting $2,500 in what I call the number two player in this market or the the second best player, okay, now I’m not saying like the number two in terms of like their market share.
I’m just saying like, the way I view it, okay, I was in view, like Southwest Airlines is a chrome della krim in the US for for, you know, these type of companies. And I view Delta as kind of number two.
And so delta is the next lockup period for $2,500. In this is a stock that’s down 45 plus percent year to date, right? It’s down over 40%. One year, I mean, this stock is still being down a very badly so I put about $2,500 there. Okay, next stock up here.
I’m putting $2,500 Yes, in this one. This is kind of a different one, right? in Hawaiian holdings. This is an airline company in Hawaii, I actually think Hawaii is probably going to bounce back pretty strong in 2021. And especially moving into 2022. I believe the same thing will happen in the city. I live in Las Vegas.
Okay, I think some of these tourist spots are going to heat back up. Let’s just put that way in 21. And especially 2022. So I’m putting $2,500 in Hawaiian holdings. It’s a very small market cap on this one $600 million market cap right. Stocks been destroyed. I mean, just absolutely destroyed down over 55%.
Year to date down 54% plus on a one year, I mean, that stock has just been trashed. And so that’s the one I’m really playing for some big potential upside, as well as the next one we’ll get into but Hawaiian holdings, I think that one’s pretty attractive. Okay.
And then the last one, I’m putting $2,500 in his United airline holdings, okay, this is a worst beaten down stock of this bunch, the stock is down 60% year to date, it is down around 60%. In the one year, I mean, look at the 52 week range, it was all the way down to just under $18.
I mean, it’s been all the way up to $95. In the last 52 weeks that I was when you know, the airlines were doing really, really well. So I mean, this is just an absolute beaten down dog sock. I mean, this is even the type of stock I might consider some call options on just as like, you know, kind of a more of a spec play, let’s just call it that more of a spec play.
But look at that stock. I mean, it has just been absolutely destroyed. So that’s my, that’s just like the worst being down one of the bunch that I’m saying you know what, put $2,500 there as well. And then what I’m doing is I would hold these stocks for one to two years.
I would let them hopefully, you know, price appreciate if things worked out, praise appreciates. Over the next few years, the stocks should see nice gains and 21. And they should see nice gains in 22.
So then, at that point, as the stocks hopefully appreciate, and a lot of these stocks could end up doubling up, if the airline’s come back really strong, a lot of these stocks could end up doubling up. Okay.
And so let’s assume a lot of these stocks go up 50% 75% 100%, which is definitely possible over the next year or two. If these stocks, you know, bounce back really strong with their businesses, then it’s time to flip out of these because I don’t want to be an airline’s long term heck now, okay.
It’s just not an industry I like, as a long term investor, let’s just put that way. You know, airlines are going to be airlines, but it is a bit of a commoditized business. Let’s put it that way. If you can get in when the stocks are really low, that’s great.
And you can make a lot of money, but man, it’s just not a great sector industry to be a long term investor in just as most commodity industries are not okay, so I’d say okay, now it’s time to flip out. What am I flipping out into the Boeing Company? Okay. That’s when I flip into the Boeing because here’s what’s going to happen.
Boeing’s numbers are going to be awful in 21, they’re likely going to still be awful, and even 2022. Okay, bonus number should be bad for several years out. Because think about it. As the airline’s start to recover.
There’s no like they’re all going to be running out to go purchase a bunch of planes from Boeing, okay, what’s going to happen is the airlines will start getting back on the right track, they’ll get cashflow positive,
they’re going to start probably paying off some very high interest debt, maybe raise some money here and there, get back to maybe some share buybacks or some dividends down the road, especially in 2022. So they’re not going to run out and just buy a bunch of Boeing planes overnight or something like that.
That’s not happening. So Boeing’s numbers in my opinion, are going to be awful for 2021 and 2022. Okay, just really really bad. Like they’re not recovering. It’s going to the airlines have to recover way before Boeing recovers their business. Let’s just put it that way. Okay.
So being that the stock would be a very bad stock and and by the way, bones market cap right now is under $100 billion. So being that this is going to be a very bad stock for the next couple years.
If you’re looking at this and you’re thinking okay, I’m holding these airline stocks 2021 2022 flip out of that, and get in Boeing before plane order.
Start again because I think 2023 plane orders are Gonna start flying in again for Boeing and no pun intended, okay, I think 2023 will be that year that a lot of these airlines will start go ahead and purchasing aircrafts again in pretty large volumes from Boeing is just basically all these airline companies have to get, they have to get their company straight before they go ahead and they start saying,
Oh, I’m gonna go buy another 5 billion 10 billion $15 billion worth of, you know, Boeing aircrafts, they gotta get their businesses right 2023 the plane order start flying in the left and right for Boeing.
And once in Boeing make once you get in that stock, that could actually be a stock your whole long term, like five years plus, okay, I mean, I would have no problem holding Boeing stock long term is not the best management team in the world, there’s no doubt about that.
They’ll probably be management changes over the next couple years, in my opinion over there at Boeing, okay. Basically, with everything that happened with the 737 max situation, and then they got hit with a once in 100 year event is just damaged a business in a massive way.
However, this is a business that is likely going to be around for long term in theory for the long term, they are a defense contractor, right?
And they also are the only big player in this space of basically commercial aircrafts case. So they’re not going anywhere, but they’re gonna have, they’re gonna have a tough next couple years, even if the airlines recover 2023.
And Ford looks really interesting for Boeing, and allows us an opportunity to maybe get in that stock before Wall Street start getting in that stock in a major way if we let’s say we flip into that in 2022.
That’s probably still before like Wall Street starts getting in that in a massive way and lets Wall Street just so desperate to get in that stock way early, which usually is not the case, they usually wait for six to 12 months before a company starts coming back and turning around before they want to start getting in it. So anyways, hope you guys enjoyed this video.
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What’s you’re planning on doing with the airline stocks anything out there I would love to hear from you guys. As always. Also, if you want to check out stock hub and chat about stocks with about 15,000 other members, you can go ahead and do that it is absolutely free to join it’ll be the pinned comment down there.
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