Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

I’m Leaving on A Jetplane: Southwest Airlines Co. (LUV) and More

Page 1 of 2

Gone are the days where flying around the country, or even the world, was something only the rich could do. Nowadays, flights are a lot cheaper and more accessible. I can log on to one of a growing number of websites to search for flights on some of the world’s leading airlines.

Flying around the country hassle free has become an easy task thanks to Southwest Airlines Co. (NYSE:LUV). Flying around the world isn’t too difficult either, thanks to American companies like Delta Air Lines, Inc. (NYSE:DAL) and US Airways Group, Inc. (NYSE:LCC). These three airlines are doing it right, they are profitable. Many of their counterparts are either just breaking even, losing money, or sitting through bankruptcy proceedings. Let’s see what these three are doing right and if we should invest in them.

Southwest Airlines Co. (LUV)Love is all Around

Southwest Airlines has, for the longest time, been all about the love–just look at their ticker! The company focuses on flying customers from point to point across the United States and Mexico. Southwest is based out of Dallas, the city where the company got its start by flying in a triangle formation around Texas (Houston/Dallas/San Antonio-Austin). Since those early days, though, things have changed at the airline. What was once three destinations is now closing in on 100.

Over the last five years the EPS growth at Southwest has been kind of stagnant. The company has, on average, dropped its EPS by 1.73% per year. Of course, that’s to be expected as the country was going through a huge downturn at the time those numbers came out. A look at the three year EPS growth rate shows a humongous 40.58% growth! Taking in future analysts’ estimates of 75.38% growth for FY2013 and a further 15.77% for FY2014, I think I’m about to fall in love with LUV.

Those huge expected growth numbers come with a pretty hefty P/E ratio at 20.8. Price to sales is looking low, especially compared to the industry at just 0.5, and the price to tangible book isn’t too high either at only 1.44. Southwest also has relatively little debt compared to their equity, with a LT debt to equity ratio of 0.47.

Remaining Relevant At All Costs

Delta Airlines has been on a roller coaster ride over the past few years. The downturn hit the company pretty badly but they managed to hang in there and fight another day. Fast-forward to 2012 and Delta is making arguably one of its most questionable decisions of the past few years: they’re buying a refinery. That’s right, last May Delta Airlines acquired the Phillips 66 refinery in Trainer PA at the cost of $150 million. The goal of the acquisition was to hedge fuel costs, something that analysts called a smart move. Could it really be though? Only time will tell on that one, I’m more for the focus on what you do best aspect, and this branching out into refining could prove to be harmful to the company over the long term.

Delta is expected to see earnings growth over the coming years, a good thing for the company, for investors, and for the airline industry as a whole. We’re looking at 44% gains in FY2013 and a further 14% on top of that for FY2014. Both figures average out to some pretty good gains over the next couple of years.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!