5 Best Airline Stocks To Buy Now

2. Southwest Airlines Co. (NYSE:LUV)

Number of Hedge Fund Holders: 46

Southwest Airlines Co. (NYSE:LUV) is a Texas-based passenger airline company that provides scheduled air transportation services in the United States and closeby international markets. On October 31, Morgan Stanley categorized Southwest Airlines Co. (NYSE:LUV) as a top pick in the airline sector given its solid franchise, management team, fortress balance sheet, and exposure to the rising tide in both leisure and corporate travel. Morgan Stanley also believes that Southwest Airlines Co. (NYSE:LUV) will stand out as investors pile into the airline sector again. 

On October 11, Susquehanna analyst Christopher Stathoulopoulos maintained a Positive rating on Southwest Airlines Co. (NYSE:LUV) but slashed the price target on the shares to $40 from $45. The analyst said while he remains optimistic on the shares, he believes that the relative outsized growth might be hard to come by, with unit economics pressured into 2023.

According to Insider Monkey’s data, 46 hedge funds were bullish on Southwest Airlines Co. (NYSE:LUV) at the end of June 2022, compared to 45 funds in the last quarter. Steve Cohen’s Point72 Asset Management is a prominent stakeholder of the company, with 2.25 million shares worth $81.3 million. 

Here is what ClearBridge Investments has to say about Southwest Airlines Co. (NYSE:LUV) in its Q1 2021 investor letter:

“One of our goals as we constantly monitor the portfolio is to see if we can better deploy capital by lowering the probability of being wrong. This motivation drove our swap of Delta Airlines into Southwest Airlines during the quarter. We expect a huge rebound in airline traffic as COVID-19 concerns abate, but we are much more comfortable that it will be led by leisure travel. Conversely, we are more uncertain of the ultimate level and timing of business travel demand. Southwest, with its simple fare strategy and high leisure travel exposure, is better positioned to capture the ongoing traffic rebound without having to answer the business travel demand question on which Delta is more dependent. As a result, we expect Southwest to play serious offense as it gains share in the rebounding travel market and can fully leverage the massive pent-up demand for travel that we expect. In addition, the U.S. lead in vaccination over Europe favors Southwest over Delta, given the domestic focus of Southwest. COVID-19 has changed many things, but humans by their very nature like to move, and many of them will do it on Southwest.”