In this article we discuss the 5 best airline stocks to buy now. If you want to read our detailed analysis of the airline industry, go directly to the 10 Best Airline Stocks to Buy Now.
5. Alaska Air Group, Inc. (NYSE: ALK)
Number of Hedge Fund Holders: 32
Alaska Air Group, Inc. (NYSE: ALK) is a provider of passenger and cargo air transportation services in 115 destinations throughout the US and North America. The company ranks 5th on our list of the best airline stocks to buy now
On May 24th, Alaska Air Group, Inc. (NYSE: ALK) raised its cash flow guidance for the second quarter to $550 million – $650 million from $450 million to $550 million, because of growing demands for future air travel. The company also said it would be boosting its fleet numbers by adding 30 mainline and regional aircraft in the coming years, because of the expectation of domestic travel levels to increase by 2022. New additions to the fleet may include 17 new Embraer 175 jets in 2022 and 2023 and 13 Boeing 737-9 MAX planes in 2023 and 2024.
In its first quarter of 2021 report, Alaska Air Group, Inc. (NYSE: ALK) reported EPS of -$3.51 versus estimates of -$3.64 and revenue valued at $797 million. The stock has gained 26.07% in the past 6 months and 28.57% year to date.
By the end of the first quarter of 2021, 32 hedge funds out of the 866 tracked by Insider Monkey for the quarter held stakes in Alaska Air Group, Inc. (NYSE: ALK). The total value of their stakes was roughly $587 million. This is compared to 35 hedge funds holding stakes in the company worth about $552 million.
White Brook Capital, an investment management firm, mentioned Alaska Air Group, Inc. (NYSE: ALK) in its first-quarter 2021 investor letter. Here’s what they said:
“Despite initiating a position in the fourth quarter, Alaska Airlines Group, Inc (ALK) was sold during the first quarter. The Alaska Airlines investment was envisioned to be a long-term investment, but the stock price appreciated more quickly than expected. Like many other “re-open trades”, the value of the company including its debt now exceeds the value pre-pandemic. For that to be reasonable I’d have to believe:
1) The company/industry had too little debt and by adding debt they’ve better optimized their balance sheet for equity returns while still maintaining downside resiliency;
2) The company/industry’s profitability will be better moving forward than it was pre-pandemic and therefore warrant a higher multiple; and/or
3) The company/industry was significantly mispriced before the pandemic.
The first was true of Alaska Airlines pre-pandemic, but the certainty one can have about the second and third is not high enough to compel continued investment at today’s prices. The intended long-term position turned into a short-term trade with an exceptional IRR.”