Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

JetBlue Airways Corporation (JBLU), Allegiant Travel Company (ALGT), Republic Airways Holdings Inc. (RJET): Airline Stocks Soar, But How Much Room Is Left?

Small is beautiful

When economist Schumacher said ‘Small is Beautiful,’ airlines were not on his mind, but the phrase applies perfectly to this sector. Nevada-based leisure travel company Allegiant Travel Company (NASDAQ:ALGT) is among the better picks in the aviation sector. The company operates a fleet of more than 60 aircraft primarily aimed at leisure destinations and small cities. Compared to its commercial counterparts, Allegiant Travel Company (NASDAQ:ALGT)’s business involves a higher degree of seasonality but still works out in its favor, as it is largely free of unprofitable commercial commitments. This is visible in its margins as well. For the latest reporting period ended March 31, the company’s net profit jumped 47 percent to $31.9 million, translating into a margin of 11.7 percent, up from 8.6 percent for the full year 2012. Allegiant Travel Company (NASDAQ:ALGT)’s stock has surged 12.7 percent over the last month but still trades at an attractive forward earnings ratio of 16.7.

Foolish bottom line

If one has to take a fundamental call in the sector, Allegiant Travel Company (NASDAQ:ALGT) and JetBlue Airways Corporation (NASDAQ:JBLU) are among the better plays. Both are strong financially but JetBlue Airways Corporation (NASDAQ:JBLU) appears fully valued for commercial airlines. On the other hand, Republic Airways Holdings Inc. (NASDAQ:RJET) comes with a debt pile and labor issues and thus is best avoided.

The article Airline Stocks Soar, But How Much Room Is Left? originally appeared on

Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.