A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE: JETS) is down 10% and many of the major carriers are down upwards of 20% since the beginning of the year. Investors are now skittish about shares that have popped triple-digits over the last five years in an industry notorious for cyclicality and heavy competition. #-ad_banner-#Taking a closer look at the data reveals some broad differences in outlook among the individual names and an opportunity to profit from the current… Read More
A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE: JETS) is down 10% and many of the major carriers are down upwards of 20% since the beginning of the year. Investors are now skittish about shares that have popped triple-digits over the last five years in an industry notorious for cyclicality and heavy competition. #-ad_banner-#Taking a closer look at the data reveals some broad differences in outlook among the individual names and an opportunity to profit from the current selloff. Capacity growth could moderate in some routes and oil may have topped out for the year. One heavy-weight is trading for nearly half the valuation of its peers and is taking advantage of the situation to buy up its shares. Diverging Outlooks For Regional Versus International Carriers The Air Transport Bureau reported in May that available seats per kilometer, the industry metric for capacity, grew by an annualized 9.6% in February on a year-over-year basis. The increase was significant because it was the first time in more than a year that capacity growth had outstripped passenger traffic. Airlines… Read More