Out Fox The $treet

Update - Jan. 6, 2025 American Airlines gets a couple of big upgrades including TD Cowen with a $25 PT. As usually, the analysts waited until the stock was at multi-year highs.  -Shares of American Airlines (NASDAQ:AAL) are getting a lift early Monday as TD Cowen and Jefferies both upgraded the stock to Buy from Hold with Cowen raising its target price to a street high of $25. -American’s (AAL) strategy to focus on its short-haul network that is “ideally” served by its regional fleet offers connectivity to its carrier’s Sun Belt hubs and benefits its international network, a stark difference from other carriers that focus on their large, coastal hubs, Jefferies analyst Conor Walters writes in Monday’s research note. -“Ongoing corporate share recapture, lower capacity and [capital expenditures] and a new [credit card deal with Citigroup] means American (AAL) could see significant surprise to the upside in 2025 against a rationalizing industry backdrop,” Walters adds. Original articl...

  American Airlines' stock is near yearly lows despite the airline returning to producing massive profits. Higher fuel prices are a concern for the market, but they don't significantly impact the airline's ability to generate substantial profits. The stock is far too cheap trading at only 4.5x EPS targets while industrial transport peers trade at 3x the PE multiple. Despite the airlines returning to massive profits over the last year,  American Airlines Group  ( NASDAQ: AAL ) is back to near yearly lows. One prime reason for the weakness is higher fuel prices constantly feared by the market for  no rational reason pushing the valuation far below industrial transport peers. My  investment thesis  remains ultra Bullish on the airline due to the cheap valuation from the irrational dip in the stock back below $14. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please read the disclaimer page for more details. 

Updated - Apr. 11, 2023 Delta Air Lines (DAL) guides up for Q2 and '23, yet the market yawns. American Airlines again fell on the strong guidance from the airline.  -“Delta is building momentum, with the best people in the industry generating nearly $5B of operating profit over the last twelve months,” CEO Ed Bastian said. “For the June quarter, we expect to deliver record revenue, and an adjusted operating margin of 14 to 16 percent with earnings per share of $2.00 to $2.25. With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2B.” -The consensus EPS forecast for the second quarter stood at $1.64 while full-year forecasts were pegged at $5.37. The 15% to 20% revenue growth guide is also well above the 10.56% consensus. Original article posted on April 7.  American Airlines won't be harmed by h...

This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   Update - Jan. 13 Comical that $ AAL  is down on this guidance from $ DAL . Delta lost a lot of money last Q1 and the airline is still guiding to a $7+ EPS in 2024. The stock should hit $100 next year, yet investors aren't sure whether to pay $40 fro Delta... pure insanity.  -Delta Air Lines (NYSE:DAL) stock slipped in premarket trading on Friday after the carrier offered lighter than expected Q1 EPS guide. -For the fourth quarter reported on Friday, the Atlanta-based airline posted $1.48 in adjusted earnings per share and $13.44, both of which cruised past the analyst consensus. The carrier also noted an adjusted operating operating margin of 11.6% for the quarter and $10.89B in passenger revenue, above the $10.6B consensus expectation. -“As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to d...

American Airlines guided to strong Q2'22 results including record revenues. The airline has easily overcome fuel prices up 60% due to much higher TRASM. Most analysts remain neutral or bearish on the stock providing plenty of catalysts for higher prices. The stock trades at just 5x normalized PE estimates as debt is repaid over the next few years. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.     Learn More »   After guiding to blowout numbers going forward,  American Airlines Group  ( NASDAQ: AAL ) saw a mostly tepid reaction by the stock market. The consensus view isn't even bullish on the airline despite trading at the year lows. My  investment  thesis  remains very Bullish on this and stock and the general airline sector. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please review the disclaimer page for more details. 

Amazingly, Seeking Alpha is unable to find another Bull to highlight their view on American Airlines (AAL) . All of the other contributors on the financial site pretty much think the airline is going bankrupt. When just about every so-called financial expert is on the same side of a trade usually the opposite happens. Passenger traffic continues to rebound in the best signal the market will return to normal by next year. More research: American Airlines: Stop The Bankruptcy Talk Disclosure: Long AAL. Please review the disclaimer page for more details. 

Delta Air Lines entered the crisis already trading at a disaster discount. The airlines are quickly approaching load factors where average flights are break-even. The stock has upside from the 52-week high of $63 due to eventual multiple expansion. Delta Air Lines  (NYSE: DAL ) continues to rebound from the Buffett lows as airline traffic rises off the April lows. One of the most crucial metrics for valuing the airlines going forward is the load factor. My  investment thesis  is highly bullish on the airlines even with this recent rally in the stock as the load factors are rising and the potential for eliminating the disaster discount coming out of this down cycle improves the long-term potential of Delta. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

American Airlines has over $17 billion in liquidity to survive the current air passenger traffic crash. The company has billions in unencumbered assets and a very valuable loyalty program as additional collateral for more funding. May 8th passenger traffic was up over 25% to the highest level since March 25. The market continues to misunderstand daily cash burn rates making the stock a buy at $10. The story of the day for  American Airlines Group  ( AAL ) is that the airline now has breathing room. With the government aid, the company has the liquidity to survive as passenger traffic continues to grow on a weekly basis even faster than ridesharing. The market remains highly fearful due to negative headlines such as Warren Buffett selling shares, but my  investment thesis  is even more bullish here. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

Southwest Airlines reported mixed Q1 results as the coronavirus hit March revenues. The airline now has access to over $13 billion of cash after raising an additional $3 billion of funds. The company has reduced cash burn to ~$10 million. The stock is a bargain at 7x normalized earnings, but the airline isn't the best deal in the sector. Southwest Airlines  ( LUV ) has seen a tepid rally following  Q1 results  as the company is poised to quickly wipe out the daily cash burn. The general airline industry was up over 10% on the quarterly news and bullish signs of  reopening the economy  and international travel with passenger tests. Unfortunately, this airline caused a self-inflicted wound by rushing out equity offerings when cash wasn't needed. Under $30, my  investment thesis  remains bullish on the stock while acknowledging that better upside exists in other sector stocks. Read the full article on Seeking Alpha.  Disclosure...

More evidence continues to show that the strikes on Saudi oil facilities actually came from Iranian missles, not Yemen drones. Not even sure, if it matters, because the whole world knows that Iran was involved.  Dion Nissenbaum ✔ @DionNissenbaum US looking to declassify satellite imagery to bolster contentions that Iran was origin of weekend attack on Saudi oil industry as mounting evidence points to cruise missiles fired from Iran or Iraq, not Houthi drones launched from Yemen: https://www. wsj.com/articles/iran- rejects-u-s-accusations-over-saudi-oil-facility-attacks-11568544181?mod=hp_lead_pos1  … w/ @ summer_said Iran Rejects U.S. Accusations Over Saudi Oil-Facility Attacks Iran denied American accusations that it was behind Saturday’s strikes on Saudi oil facilities, as the kingdom rushed to contain the fallout from attacks that could disrupt global petroleum supplies. wsj.com 437 8:35 AM - Sep 15, ...

American Airlines has been beaten down this last year as investors incorrectly focus on net debt levels. Reduced capital expenditures and pension payments will free up around $3 billion in additional cash flows. The stock trades at half the P/S multiple of Delta Air Lines. The airline is in the middle of a $4.2 billion initiative to improve revenues and lower costs. The amazing decline in   American Airlines Group   ( AAL ) has left the stock at such a discount to the sector that a major Wall Street analyst actually called the stock undervalued due to the simple   P/S multiple . The airline has a lot more going on to support owning the stock, but an easy bull case always helps. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

The airline stocks took a hit today due to some weaker than forecast numbers from Southwest Airlines (LUV) . Investors need to avoid the urge to dump airlines like American Airlines Group (AAL) and United Airlines (UAL) .

The question investors need to ask is why are they sold the legacy airlines based on one number and not the complete picture. This interview with the Delta Air Lines (DAL) CEO should've had investors rushing back into the stock today. Ironically though, the stocks didn't gain until oil prices rose. My Net Payout Yields portfolio continues to hold American Airlines Group (AAL) and United Airlines (UAL) due to massive stock buybacks. These dips in the sector are actually good for those stocks. The cheaper the better for the stock buyback plans. Disclosure: Long AAL and UAL. Please review the disclaimer page for more details. 

Jamie Baker, JPMorgan Chase senior airline analyst, discusses how the airlines are fundamentally different now. The market continues of focus on every hurdle while the legacy stocks are extremely cheap. One can almost throw a dart at Delta Air Lines (DAL) , American Airlines Group (AAL) , and United Airlines (UAL) and win at these levels. Watch him take down the CNBC host on baggage fees. Disclosure: Long AAL. Please review the disclaimer page for more details. 

The investment thesis remains that the airline industry has changed from the money-losing sector of the past. Airlines like AAL haven't seen the stocks benefit from the lower fuel prices and large profits. Industry moves related to suddenly higher oil prices are signs of the changing industry for the good. The airline sector and  American Airlines Group (NASDAQ: AAL )  in particular are trading at multi-year lows due to fears of an industry relapsing to problems of the past. The market though appears to be overlooking some industry facts in the process of quickly rushing to a negative judgment. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please read the disclaimer page for more details.

The top 10 net payout yields had a sizable loss that failed to match the small gain in the benchmark for April. The top 10 net payout yield stocks average yields of 18.1% to start May. American Airlines took over the lead with the highest yield at 27.0%. This article is a continuation of a monthly series, highlighting the top net payout yield (NYSE: NPY ) stocks, that was started back in June 2012 (see  article ) and explained in August 2012 (see  article ). The series highlights the best stocks for the upcoming month utilized in part to make investment decisions for the  Covestor model  that is now beating the S&P 500 for five out of the last six years. Please review the original articles for more information on the NPY concept. Read there full article on Seeking Alpha.   Disclosure: Long AAL, AMP, M, MSI, NTAP, QCOM. Please read the disclaimer page for more details.

American Airlines generated huge Q1 pre-tax profits while the market focuses on PRASM declines. The airline continues to dramatically reduce the share count as the low stock valuation greatly enhances any share repurchases. The stock is insulated from a large earnings decline at this valuation. On Friday,  American Airlines Group (NASDAQ: AAL )  dropped 4.5% after reporting  Q1 earnings . The market again appears obsessively focused on short-term PRASM (passenger revenue per available seat mile) issues and missing the big picture.  Read the full article on Seeking Alpha.     Disclosure:Long AAL. Please read the disclaimer page for more details.

United Airlines is generally seen as the weakest legacy airline highlighted by the activist moves. The large stock buybacks isn't accurately reflected in EPS estimates and stock valuation. The recommendation is to use any dips to load up on the airline. Despite generally considered the worst of the legacy airlines further  highlighted  by the battle over the BOD,  United Airlines (NYSE: UAL )  is now a cash flow machine. The airline even  announced  a bigger intention to repurchase shares as the stock plunged during Q1.  Read the full article on Seeking Alpha.  Disclosure: Long UAL. Please read the disclaimer page for more details.  

The top 10 net payout yields had a larger loss than the benchmark index in January. . The top 10 net payout yield stocks average yields of 20.8% to start February. . Motorola Solutions continues to hold the highest yields at 38.6%. . This article is a continuation of a monthly series, highlighting the top net payout yield (NPY) stocks, that was started back in June 2012 (see  article ) and explained in August 2012 (see  article ). The series highlights the best stocks for the upcoming month utilized in part to make investment decisions for the  Covestor model  that is now beating the S&P 500 for five out of the last six years. Please review the original articles for more information on the NPY concept.  Read the full article on Seeking Alpha.  Disclosure: Long AAL, AIG, BBY, CBS, CTL, GM, KSS, M, MSI, NTAP, QCOM. Please read the disclaimer page for more details.