11 Best Airline Stocks To Buy Now

Published on November 8, 2022 at 10:09 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 11 best airline stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Airline Stocks To Buy Now.

The International Air Transport Association (IATA) expects passenger revenues to account for $498 billion of total industry revenues in 2022, more than double the $239 billion generated in 2021. Scheduled passenger numbers are forecasted to reach 3.8 billion and yields are expected to increase 5.6%. In 2022, industry revenues are expected to touch $782 billion, up 54.5% as compared to 2021 and 93.3% of the 2019 levels. The number of flights operated in 2022 will amount to 33.8 million as per IATA, which is 86.9% of 2019 levels, when total flights amounted to 38.9 million. Overall, expenses are expected to climb to $796 billion, which is a 44% increase as compared to 2021, reflecting the costs of expanding operations and the inflationary impact.

IATA expects that the airline industry will be profitable in 2023 as pent-up travel demand leads to higher airline bookings even as the global economy weakens. Bloomberg cited IATA Director General Willie Walsh, who told a group of airline chiefs in June 2022:

“Industry-wide profit should be on the horizon in 2023. We are rebounding. By next year, most markets should see traffic reach or exceed pre-pandemic levels.”

While Walsh did not overlook the harsh economic and political climate, he noted that “the desire to travel and the necessity of moving goods are both solid.” The North American market is on its way to profitability, and airlines are forecasted to collectively report a net income of $8.8 billion this year. Some of the best airline stocks to buy in order to benefit from the boom in the sector include Delta Air Lines, Inc. (NYSE:DAL), Southwest Airlines Co. (NYSE:LUV), and American Airlines Group Inc. (NASDAQ:AAL).

Our Methodology

We selected the following airline stocks based on growth fundamentals, positive analyst coverage, and strong hedge fund sentiment as of June 2022. We have arranged the list according to the number of hedge fund holders in each firm, tracked by Insider Monkey as of the second quarter of 2022.

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Best Airline Stocks To Buy Now

11. Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY)

Number of Hedge Fund Holders: 13

Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) is a Minnesota-based air carrier company that provides scheduled passenger, air cargo, charter air transportation, and related services in the United States, Latin America, and internationally. On November 1, the company posted its Q3 results, reporting a non-GAAP EPS of $0.12 and a revenue of $221.7 million, outperforming Wall Street estimates by $0.08 and $4.97 million, respectively.

On October 12, Barclays analyst Brandon Oglenski reiterated an Overweight rating on Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) but lowered the price target on the shares to $21 from $26. Despite “likely favorable” short-term revenue outlook by many airlines, the analyst significantly trimmed 2023 earnings forecasts to factor in weaker demand expectations and soaring fuel prices. However, the analyst told investors that the Q3 earnings season could bring some brighter news on U.S. travel demand “relative to a more somber transport outlook”.

According to Insider Monkey’s data, 13 hedge funds were bullish on Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) at the end of June 2022, compared to 14 funds in the prior quarter. Paul Reeder and Edward Shapiro’s PAR Capital Management is the leading position holder in the company, with 2.2 million shares worth $40.2 million.

Like Delta Air Lines, Inc. (NYSE:DAL), Southwest Airlines Co. (NYSE:LUV), and American Airlines Group Inc. (NASDAQ:AAL), Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) is one of the best airline stocks to invest in.

10. Ryanair Holdings plc (NASDAQ:RYAAY)

Number of Hedge Fund Holders: 14

Ryanair Holdings plc (NASDAQ:RYAAY) is an Irish company that focuses on scheduled-passenger airline services in Ireland, the United Kingdom, Italy, Spain, Germany, and other European countries. On November 2, Ryanair Holdings plc (NASDAQ:RYAAY) disclosed that it flew 15.7 million passengers during October, up 37.7% year-over-year and up 14% on pre-COVID levels. The airline expects to fly 166.5 million passengers in the year to the end of March 2023, ahead of its previous record of 149 million. Ryanair Holdings plc (NASDAQ:RYAAY) is one of the best airline stocks to invest in.

On October 24, Deutsche Bank analyst Jaime Rowbotham maintained a Buy recommendation on Ryanair Holdings plc (NASDAQ:RYAAY) but lowered the price target on the shares to EUR 14.50 from EUR 15.50.

According to Insider Monkey’s data, 14 hedge funds were bullish on Ryanair Holdings plc (NASDAQ:RYAAY) at the end of June 2022, compared to 17 funds in the prior quarter. Harris Associates is the leading position holder in the company, with nearly 9 million shares worth $601.3 million.

Here is what Artisan International Fund has to say about Ryanair Holdings plc (NASDAQ:RYAAY) in its Q4 2020 investor letter:

“Our top Q4 contributor was Ryanair Holdings, a low-cost European airline. The positive vaccine-related news caused Ryanair and other travel and leisure stocks to rally sharply as markets looked ahead to travel demand’s recovery in 2021. We continue to like Ryanair’s leading market position, low cost base and history of returning capital to shareholders.”

9. Frontier Group Holdings, Inc. (NASDAQ:ULCC)

Number of Hedge Fund Holders: 17

Frontier Group Holdings, Inc. (NASDAQ:ULCC) is a Colorado-based low-fare airline company that provides air transportation for passengers. The airline serves approximately 120 airports throughout the United States and international destinations in the Americas. Frontier Group Holdings, Inc. (NASDAQ:ULCC) stock climbed after reporting stronger than expected profits in Q3 2022 and forecasting continued improvement. It is one of the premier airline stocks to invest in.

On October 27, Cowen analyst Helane Becker maintained an Outperform rating on Frontier Group Holdings, Inc. (NASDAQ:ULCC) but trimmed the firm’s price target on the shares to $18 from $20. The analyst said record ancillary revenues supported the top line while unit costs were helped by higher asset utilization and benefits from the company’s cost control initiatives.

Among the hedge funds tracked by Insider Monkey, Frontier Group Holdings, Inc. (NASDAQ:ULCC) was part of 17 public stock portfolios at the end of June 2022, compared to 24 in the prior quarter. Quincy Lee’s Ancient Art is the leading position holder in the company, with 5.10 million shares worth $47.85 million.

8. Copa Holdings, S.A. (NYSE:CPA)

Number of Hedge Fund Holders: 18

Copa Holdings, S.A. (NYSE:CPA) is a Panama-based company that provides airline passenger and cargo services. The company’s latest report on October 11 reported an increase in capacity, traffic, and load factors for September 2022 as compared to September 2019. UBS analyst Rogerio Araujo upgraded Copa Holdings, S.A. (NYSE:CPA) on October 27 to Buy from Neutral with a price target of $120, up from $79. It is one of the best airline stocks to monitor.

According to the second quarter database of Insider Monkey, 18 hedge funds were long Copa Holdings, S.A. (NYSE:CPA), with combined stakes worth $309 million, compared to 29 funds in the prior quarter worth $434 million. Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading stakeholder of the company, with 1.4 million shares valued at $87.7 million.

7. Spirit Airlines, Inc. (NYSE:SAVE)

Number of Hedge Fund Holders: 25

Spirit Airlines, Inc. (NYSE:SAVE) is a Florida-based company that provides airline services. Spirit Airlines, Inc. (NYSE:SAVE) sells tickets through its call centers and airport ticket counters, and online through spirit.com. For the fourth quarter 2022, leisure demand remains robust and the company expects unit revenue to be up 15% to 16.5% on 24.5% additional capacity, compared to the fourth quarter 2019. Spirit Airlines, Inc. (NYSE:SAVE) is one of the best airline stocks to monitor.

On November 1, Citi analyst Stephen Trent raised the price target on Spirit Airlines, Inc. (NYSE:SAVE) to $23 from $22 and maintained a Neutral rating on the shares. Spirit Airlines, Inc. (NYSE:SAVE) should enjoy at least some seat mile cost dilution, as the airline recovers pre-pandemic utilization levels next year, the analyst told investors in a research note.

According to Insider Monkey’s data, 25 hedge funds were bullish on Spirit Airlines, Inc. (NYSE:SAVE) at the end of the second quarter of 2022, compared to 26 funds in the prior quarter. Paul Reeder and Edward Shapiro’s PAR Capital Management held the leading stake in the company, with 4.2 million shares worth $101.6 million.

6. Allegiant Travel Company (NASDAQ:ALGT)

Number of Hedge Fund Holders: 25

Allegiant Travel Company (NASDAQ:ALGT) is based in Las Vegas, Nevada, operating as a leisure travel company that offers scheduled air transportation between under-served cities and leisure destinations. On October 17, Allegiant Travel Company (NASDAQ:ALGT) announced that it has been granted authorization for an ultra-low cost alliance for travel between Mexico and the United States.

On November 3, Cowen analyst Helane Becker maintained an Outperform rating on Allegiant Travel Company (NASDAQ:ALGT) but slashed the price target on the shares to $120 from $153. The analyst noted that the firm trimmed Q4 capacity due to the lingering effect of Hurricane Ian resulting in a CASMex guidance well ahead of Street estimates.

According to Insider Monkey’s second quarter database, 25 funds reported owning stakes in Allegiant Travel Company (NASDAQ:ALGT), compared to 24 in the preceding quarter. Ric Dillon’s Diamond Hill Capital is the largest position holder in the company, with 501,312 shares worth $56.7 million.

In addition to Delta Air Lines, Inc. (NYSE:DAL), Southwest Airlines Co. (NYSE:LUV), and American Airlines Group Inc. (NASDAQ:AAL), Allegiant Travel Company (NASDAQ:ALGT) is one of the premier airline stocks to monitor in order to benefit from the rebound in the sector.

Diamond Hill Capital made the following comment about Allegiant Travel Company (NASDAQ:ALGT) in its Q3 2022 investor letter:

“Bottom contributors in Q3 included Allegiant Travel Company (NASDAQ:ALGT) and ESAB Corporation. Shares of low-cost airline Allegiant Travel were weak as higher fuel and labor costs pressured profitability and recession fears weighed on market sentiment. We continue to like Allegiant’s focus on leisure travel — which should continue bouncing back — and view shares as trading at a substantial discount to our estimate of intrinsic value.”

Click to continue reading and see 5 Best Airline Stocks To Buy Now.

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