In this article, we discuss the 10 best airline stocks to buy today.
The aviation industry is a significant contributor to global economic development, accounting for $3.5 trillion, or 4.1%, of global GDP in 2018, according to the 2020 Aviation Benefits report. Airlines around the world have been directly impacted by the COVID-19 pandemic, resulting in a massive drop in traffic and revenues last year. According to the world air transport statistics from the International Air Transport Association (IATA), only 1.8 billion passengers flew in 2020, a 60.2% drop from 4.5 billion passengers in 2019. However, as vaccination rollout accelerates and international travel restrictions are lifted, the airline industry is gradually recovering from the pandemic’s effects.
Despite the COVID-19 crisis, the global airline industry is expected to grow at a CAGR of 12.7% to $744 billion by 2026, up from $332.6 billion in 2020 according to a market report published by the Global Industry Analysts (GIA). As airlines steadily recover from the pandemic, IATA estimates that the global airline industry would lose approximately $12 billion in 2022, down 78% from projected losses of $52 billion in 2021.
One of the major catalysts supporting the growth of the airline industry is the increasing vaccination rate globally. In the United States, the Biden administration recently announced that restrictions on fully vaccinated travelers entering the country would be lifted beginning November. In addition, major US-based airlines including United Airlines Holdings, Inc. (NASDAQ:UAL), American Airlines Group Inc. (NASDAQ:AAL), and Southwest Airlines Co. (NYSE:LUV) are mandating employees to get vaccinated against COVID-19.
E-commerce was one of the industries that prospered during the pandemic and it drove revenue in air cargo transportation. According to IATA’s e-commerce monitoring study published in June 2021, air cargo accounted for 30% to 35% of airline revenue in 2020. This led to the rebound of air cargo above 2019 levels, which is expected to continue in 2022. Some of the biggest air cargo companies include Air Transport Services Group, Inc. (NASDAQ:ATSG), Alaska Air Group, Inc. (NYSE:ALK), and Cargojet Inc. (OTC:CGJTF).
The presence of digital travel agencies such as Expedia Group, Inc. (NASDAQ:EXPE) was a significant revenue contributor that helped some airline companies survive the pandemic. The Seattle-based online travel platform offers a template technology called Expedia Partner Solutions (EPS), which enables airlines to merge additional travel components on their website. At the end of the second quarter of 2021, Expedia Group, Inc.’s (NASDAQ:EXPE) B2B segment saw a 348% year-over-year increase in revenue to $305 million, up from $68 million in Q2 2020. More broadly, the online travel company’s second-quarter revenue came in at $2.11 billion, up 273% year over year, and beat revenue estimates by $128 million. Air revenue accounted for 4% of overall revenue in the second quarter.
Image by Rudy and Peter Skitterians from Pixabay
Our Methodology
These are some of the most popular airline stocks among the 873 hedge funds tracked by Insider Monkey. We ranked the list based on the number of hedge funds having stakes in each firm as of the second quarter.
We included only those airline stocks that have positive analyst ratings and long-term growth catalysts.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s now look at the 10 best airline stocks to buy today.
Best Airline Stocks To Buy Today
10. Frontier Group Holdings, Inc. (NASDAQ:ULCC)
Number of Hedge Fund Holders: 10
We start our list of the 10 best airline stocks to buy today with the cheap-fare airline company Frontier Group Holdings, Inc. (NASDAQ:ULCC). The Colorado-based airline serves 110 airports across the United States and flies customers to international destinations in the Americas. At the end of the second quarter of 2021, Frontier Group Holdings, Inc. (NASDAQ:ULCC) owned 109 aircraft.
Frontier Group Holdings, Inc. (NASDAQ:ULCC) posted a 184% year-over-year increase in revenue to $550 million as leisure travel progressively recovers from its pandemic low. During the second quarter of 2021, Frontier Group Holdings, Inc. (NASDAQ:ULCC) operated over 400 flights per day, which was 10% more than the pre-COVID quarter in 2019.
Of the 873 elite funds tracked by Insider Monkey, 10 were long Frontier Group Holdings, Inc. (NASDAQ:ULCC) at the end of June.
Analyst Jamie Baker of JPMorgan upgraded his rating on the airline stock to Overweight from Neutral and raised his price target to $22 from $20. The analyst believes that Frontier Group Holdings, Inc. (NASDAQ:ULCC) along with other airlines, has room to grow as COVID-19 restrictions on US borders are due to be lifted.
Just like United Airlines Holdings, Inc. (NASDAQ:UAL), American Airlines Group Inc. (NASDAQ:AAL), Southwest Airlines Co. (NYSE:LUV), and Delta Air Lines, Inc. (NYSE:DAL), Frontier Group Holdings, Inc. (NASDAQ:ULCC) is one of the airline stocks that investors are watching today.
9. Textron Inc. (NYSE:TXT)
Number of Hedge Fund Holders: 22
Textron Inc. (NYSE:TXT) is a Rhode Island-based aerospace and defense company that ranks ninth on the list of 10 best airline stocks to buy today. Textron Inc. (NYSE:TXT) manufactures and commercializes business jets, tiltrotor systems, and commercial helicopters for military and commercial use.
Textron Inc. (NYSE:TXT) shares have risen 100.84% in the last year and 48.44% year to date, as business jet traffic recovered faster than passenger airlines in the United States from COVID-19 pandemic lows.
On August 31, Cowen analyst Cai von Rumohr upgraded Textron Inc. (NYSE:TXT) to Outperform from Market Perform and increased his price target for the stock to $95 from $75, citing that the Delta variant could boost demand for business jets in comparison to the onset of the COVID-19 pandemic.
The aerospace company delivered 44 jets in the second quarter of 2021, up from 23 jets in Q2 2020, and 33 commercial turboprops, up from 15 in the same quarter last year. Revenue in the aviation segment grew by 55.4% year over year to $1.2 billion in the second quarter of 2021. Textron Inc.’s (NYSE:TXT) total revenue in the second quarter was $3.19 billion.
At the end of the second quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $962 million in Textron Inc. (NYSE:TXT), up from 21 in the previous quarter worth $702 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Pzena Investment Management is a leading shareholder in Textron Inc. (NYSE:TXT) with 7.75 million shares worth more than $533 million.
Textron Inc. (NYSE:TXT) together with United Airlines Holdings, Inc. (NASDAQ:UAL), American Airlines Group Inc. (NASDAQ:AAL), Southwest Airlines Co. (NYSE:LUV), and Delta Air Lines, Inc. (NYSE:DAL) are some of the biggest airline stocks that are getting more popular among investors today.
8. Allegiant Travel Company (NASDAQ:ALGT)
Number of Hedge Fund Holders: 29
Allegiant Travel Company (NASDAQ:ALGT) is a prominent leisure travel company in the United States, with schedules and charter airline services across the country as well as charter flights to Canada and Mexico.
The travel company, which ranks eighth in our list of the 10 best airline stocks to buy today, is also getting positive attention from market analysts. On October 12, Deutsche Bank analyst Michael Linenberg maintained a Buy rating on Allegiant Travel Company (NASDAQ:ALGT) with a price target of $275. At the end of June, 29 funds out of the 873 tracked by Insider Monkey had stakes in the company, compared to 22 in the previous quarter.
7. SkyWest, Inc. (NASDAQ:SKYW)
Number of Hedge Fund Holders: 37
With a fleet of over 450 aircraft, SkyWest, Inc. (NASDAQ:SKYW) ranks seventh on the list of 10 best airline stocks to buy today. The Utah-based aircraft leasing company operates through partnerships with American Airlines Group Inc. (NASDAQ:AAL), United Airlines Holdings, Inc. (NASDAQ:UAL), Alaska Air Group, Inc. (NYSE:ALK), and Delta Air Lines, Inc. (NYSE:DAL).
The airline stock increased 28.33% year to date, with the company reporting a 157% year-over-year boost in block hours on completed flights in the second quarter of 2021. The company’s revenue in the second quarter came in at $657 million, an increase of 88% year over year, and beat revenue estimates by $57.4 million.
As indicated in the company’s Q2 2021 results announced in July, SkyWest, Inc. (NASDAQ:SKYW) has a flying contract with Alaska Air Group, Inc. (NYSE:ALK) to provide nine E175 aircraft to be delivered in 2022 and in the first half of 2023. In addition, SkyWest, Inc. (NASDAQ:SKYW) will be delivering 20 E175 aircraft to American Airlines Group Inc. (NASDAQ:AAL) in the second half of 2021 and in 2022.
On August 20, investment bank Raymond James maintained a Strong Buy rating on SkyWest, Inc. (NASDAQ:SKYW) and raised its price target for the stock to $66 from $56 previously.
At the end of the second quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $29 million in SkyWest, Inc. (NASDAQ:SKYW).
6. Alaska Air Group, Inc. (NYSE:ALK)
Number of Hedge Fund Holders: 38
One of the biggest airlines in the US, Alaska Air Group, Inc. (NYSE:ALK) ranks sixth on the list of 10 best airline stocks to buy today. Alaska Air Group, Inc. (NYSE:ALK) provides domestic passenger and air cargo transportation to clients across the US. The company also serves flights to Mexico, Canada, Costa Rica, and Belize.
Alaska Air Group, Inc. (NYSE:ALK) saw its stock rise 0.85% in premarket trade on October 5 after the airline company announced a new commercial agreement with Iberia Airlines. Alaska Air Group, Inc. (NYSE:ALK) customers will be given access to foreign locations in Europe starting October 7, and in return, Iberia passengers will be able to book tickets and connect to Alaska Airlines routes.
On October 1, JPMorgan analyst Jamie Baker kept an Outperform rating on Alaska Air Group, Inc. (NYSE:ALK) and raised his price target for the stock to $97 from $94.
As demand for travel improved, the airline’s passenger revenue increased 338% year over year to $1.3 billion in the second quarter of 2021. Alaska Air Group, Inc.’s (NYSE:ALK) revenue in the second quarter came in at $1.53 billion and beat revenue estimates by $9.22 million.
Of the 873 elite funds tracked by Insider Monkey, 38 were long Alaska Air Group, Inc.’s (NYSE:ALK) at the end of the second quarter, up from 32 in the first quarter of 2021. Paul Reeder and Edward Shapiro of PAR Capital Management are among the biggest shareholders of the airline stock owning 1.9 million shares worth $115 million.
5. United Airlines Holdings, Inc. (NASDAQ:UAL)
Number of Hedge Fund Holders: 39
Chicago-based air transport company United Airlines Holdings, Inc. (NASDAQ:UAL) ranks fifth on the list of 10 best airline stocks to buy today. United Airlines Holdings, Inc. (NASDAQ:UAL) provides domestic and international air transportation services for passengers and cargo.
Airlines stocks are flying higher as the sector reopens following COVID-19, and institutional investors are becoming more bullish on United Airlines Holdings, Inc. (NASDAQ:UAL). Israel Englander of Millennium Management is one of the major stakeholders of the Chicago-based airline company, owning 1.28 million shares worth $56.7 million. Overall, 39 funds of the 873 elite funds tracked by Insider Monkey reported owning stakes in United Airlines Holdings, Inc. (NASDAQ:UAL) at the end of June 2021.
United Airlines Holdings, Inc. (NASDAQ:UAL) saw its stock rise 1.60% in premarket trading on October 7 after the airline revealed that it would provide over 3,500 daily domestic flights in December, up 91% from 2019, for the holiday season.
The company’s revenue in the second quarter of 2021 was $5.47 billion, beating revenue estimates by $116.02 million. With the improvement on travel restrictions, United Airlines Holdings, Inc. (NASDAQ:UAL) reported a year-over-year increase of 541.1% in consolidated passenger revenue in the second quarter to $4.36 billion.
On September 14, Morgan Stanley analysts kept an Equal-weight rating on United Airlines Holdings, Inc. (NASDAQ:UAL) with a price target of $64 per share. The stock gained 16.12%, year to date.
4. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 49
Ranking fourth on the list of 10 best airline stocks to buy today is Delta Air Lines, Inc. (NYSE:DAL). The Atlanta-based airline company is operating a fleet of 1,100 aircraft. Delta Air Lines, Inc. (NYSE:DAL) provides air transport for cargo and passenger clients in the US and internationally.
After halting expansion projects in Boston in 2020 owing to COVID-19, Delta Air Lines, Inc. (NYSE:DAL) has resumed its pre-pandemic growth strategy. On October 3, the airline announced new routes to Baltimore, Athens, Tel-Aviv, Denver, and San Diego in summer 2022. By next summer, the company plans to operate up to 160 daily departures from Boston, representing a 20% increase in capacity since pre-pandemic levels in October 2019. Shares of Delta Air Lines, Inc. (NYSE:DAL) climbed 9.48%, year to date.
As of the end of the second quarter, 49 hedge funds tracked by Insider Monkey reported owning stakes in Delta Air Lines, Inc. (NYSE:DAL). The total worth of these stakes is $1.22 billion.
On October 14, Morgan Stanley analyst Ravi Shanker maintained an Overweight rating on United Airlines Holdings, Inc. (NASDAQ:UAL) with a price target of $62 per share. The airline recently announced its third-quarter revenue of $9.15 billion, beating revenue estimates by $689.4 million.
3. Southwest Airlines Co. (NYSE:LUV)
Number of Hedge Fund Holders: 49
Southwest Airlines Co. (NYSE:LUV) operates a fleet of 736 Boeing 737 aircraft and it ranks third on the list of 10 best airline stocks to buy today.
Southwest Airlines Co. (NYSE:LUV) stock jumped 1.90% in premarket trading on October 4 after Barclays analyst Brandon Oglenski upgraded the airline stock to Overweight from Equal-Weight and raised his price target for the stock to $75 from $64.
The company’s revenue in the second quarter came in at $4 billion, an increase of 297.6% year over year, and it outperformed revenue estimates by $69.46 million, owing primarily to increases in leisure passenger traffic and fares. Southwest Airlines Co. (NYSE:LUV) had 736 Boeing 737 aircraft, including 68 MAX 8 aircraft at the end of the second quarter of 2021. The stock gained 38.3% in the past twelve months and 15.7%, year to date.
At the end of the second quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $926 million in Southwest Airlines Co. (NYSE:LUV), down from 52 in the previous quarter worth $747 million.
In its Q1 2021 investor letter, ClearBridge Investments mentioned Southwest Airlines Co. (NYSE:LUV) and shared their insights on the company. Here is what the fund said:
“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.”
2. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 59
The Boeing Company (NYSE:BA) is a Chicago-based aerospace company that ranks second on the list of 10 best airline stocks to buy today. The Boeing Company (NYSE:BA) manufactures commercial jets as well as military aircraft. In September, the US Army granted the aerospace and defense firm a $391 million deal for up to five CH-47F renew planes.
Shares of The Boeing Company (NYSE:BA) climbed 4.2% on July 28 after the aviation company reported solid Q2 results bagging a revenue of $17 billion, an increase of 44% year over year.
In the second quarter, revenue from its commercial aviation unit increased by 268% year over year to $6.02 billion. The stock gained 35% in the past twelve months.
Of the 873 elite funds tracked by Insider Monkey, 59 were long The Boeing Company (NYSE:BA) at the end of June. New York-based hedge fund Beech Hill Partners increased its stake in The Boeing Company (NYSE:BA) by 1% to 5,612 shares worth $1.23 million.
On September 29, Bernstein analyst Douglas Harned upgraded The Boeing Company (NYSE:BA) to Outperform from Market Perform and increased his price target for the stock to $279 from $252, citing a positive outlook about the company’s position in the market as global travel resumes.
1. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 87
Expedia Group, Inc. (NASDAQ:EXPE) tops the list of 10 best airline stocks to buy today. Expedia Group, Inc. (NASDAQ:EXPE) is an online travel company that provides airline booking services to clients all over the world. The company has over 500 airline partners globally. In addition, the travel company provides online booking for hotel accommodations, tours, and restaurants.
On September 13, Goldman Sachs analyst Eric Sheridan initiated a Buy rating on Expedia Group, Inc. (NASDAQ:EXPE) with a price target of $185 per share.
The company’s second-quarter revenue was $2.11 billion, up 273% year over year, and beat revenue estimates by $128 million. Air revenue accounted for 4% of overall revenue in the second quarter and the segment revenue grew mostly due to the increase in tickets sold as air travel demand improved.
Expedia Group, Inc. (NASDAQ:EXPE) stock gained 2.2% on September 24 after CEO Peter Kern revealed that the company had just merged its loyalty rewards programs into one system. In addition, Expedia Group, Inc. (NASDAQ:EXPE) also invested in standardizing group data and algorithms to enhance traffic in its travel booking app and website, which has already starting to pay off with more testing and user information. The stock gained 28.4%, year to date.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $5.92 billion in Expedia Group, Inc. (NASDAQ:EXPE), up from 86 in the previous quarter worth $6.16 billion.
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Best Dividend Stocks for Passive Income
- 10 Best Healthcare Dividend Stocks
- Top 15 Dividend Stocks With Upside Potential
Disclosure: None. 10 Best Airline Stocks To Buy Today is originally published on Insider Monkey.
