Hawaiian Holdings, Inc. (HA): A Value Play in Emerging Markets

Additonally, vertical integration through the oil refinery purchase and horizontal integration through the equity purchase in Virgin Airways show how Delta is seizing opportunities as they arrive. For these reasons, I am bullish on Delta shares as well.

Even Alaska Air Group, Inc. (NYSE:ALK) , which is now competing for the Hawaii market as well, trades at a far greater eleven times earnings. While Alaska does have the benefit of a more diverse and expanded network, Alaska is not about to face the same levels of potential growth in the growing Asian economies. While I still like Alaska Airlines, their valuation shows how cheap Hawaiian actually is when compared to rival airlines. However, Alaska does have the advantage of size over Hawaiian. Alaska Airlines has a stronger North American network established partly through its own routes and partly through code shares. But as Hawaiian continues to expand its North American presence of the next several years, the extent of this advantage should dissipate. While this should help Hawaiian Airlines, Alaska is more diversified across mltiple markets and should not be dramatically impacted by this change.

Say Aloha to Hawaiian

Compared with American based companies, those in emerging markets often trade at a premium to compensate for expectations for future growth. By contrast, Hawaiian Holdings trades at a discount to peers yet has strong emerging markets potential based on the airline’s location and future growth plans. As travel demand increases in the Chinese market, it may ironically be an American airline that could be the winner. And with that could come some rich rewards for Hawaiian Holdings shareholders.

The article Hawaiian Airlines: A Value Play in Emerging Markets originally appeared on Fool.com and is written by Alexander MacLennan.

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