The Sky is the Limit With These Profitable Airline Stocks

Weren’t those lockdowns a real pain? Yeah, tell me about it. We all felt cabin fever and the subsequent urge to travel as soon as possible. Unsurprisingly, the travel industry is now doing incredibly well

Airline stocks can be a clever play in this market. As the economy recovers from the pandemic, the airline industry is witnessing a surge in ticket sales that shows a return to pre-pandemic levels. 

This is excellent news for investors because here lies a great opportunity to profit from the profitable. Let’s keep it interesting and stray from big names like Delta (DAL) and American Airlines (AAL). 

Strong momentum, fair valuations, solid stock metrics, and growth potential are all factors that lead to handsome returns, and I’ve found a few airline stocks that prove it… 

Copa Holdings SA (CPA) 

First up to consider is Copa Holdings (CPA), a Panama-based mid-sized carrier that has outperformed the S&P 500 with a return of over double in the first half of the fiscal year. Despite being less recognizable, CPA offers over 300 daily flights to about 80 destinations in more than 30 countries across the Americas. As the Latin American region’s recovery gains momentum after the pandemic and Brazil’s economy shows strong growth, CPA is well-positioned to benefit from the uptrend. Don’t overlook this one. 

CPA’s stock is up year-to-date by 36.80%; it comes with a positive 20/200 day SMA (simple moving average), a positive ROE (return on equity), positive TTM (trailing twelve-month) asset growth, and a solid 0.87 beta score. At its last earnings call, CPA beat analysts’ projections on EPS and revenue, most notably reporting EPS of $3.99 per share vs. $3.25 per share as expected, a 22.63% surprise. At the same time, CPA reported year-over-year growth in crucial areas like revenue (+51.73%), net income (+515.02%), and net profit margin (+304.91%). CPA has a 2.88% annual dividend yield and a quarterly payout of 82 cents ($3.28/year) per share. With a 10-day average volume of roughly 883 thousand shares, CPA has an average price target of $150, with a high of $165 and a low of $124; this indicates a potential 45% upside from its current pricing. CPA, popular among analysts, has 13 buy ratings and one hold rating

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Alaska Air Group Inc (ALK) 

Alaska Air Group (ALK) is a mid-sized carrier focusing on the Western U.S. and Canada but rapidly expanding into new markets, including the Caribbean and more direct-route flights. ALK stands out for its reliability and customer satisfaction, receiving the Global Airline of the Year award for 2022. Moreover, ALK boasts a solid financial position with very low debt, making it one of the best-performing stocks on the list. ALK is attractive for its solid track record and significant growth prospects. 

ALK is up 11.57% year-to-date and carries a positive SMA, a positive ROE, and positive TTM asset growth, not to mention a very strong PEG (price/earnings to growth) ratio of 0.68x. Most recently, ALK surpassed the EPS and revenue projections of analysts by margins of 10.95% and 2.53%, respectively; it notably reported $3.00 per share vs. the $2.70 per share predicted. It also showed year-over-year revenue growth (+6.79%), net income (+72.66%), EPS (+70.64%), and net profit margin (+61.76%). With a 10-day average volume of 2.83 million shares, ALK has a median price target of $64, with a high of $75 and a low of $58; this represents the potential for a price jump of over 56%. ALK has 13 buy ratings and two hold ratings.

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Ryanair Holdings (RYAAY) 

Ryanair Holdings (RYAAY) is an Ireland-based passenger airline that dominates short-haul travel across the U.K. and continental Europe. With a sizable fleet of approximately 500, RYAAY operates over 3,000 daily flights, connecting more than 220 airports. RYAAY’s unique model prioritizes high-frequency “shuttle” flights, providing affordable travel options that attract many passengers. This strategy has proven successful, as demonstrated by RYAAY’s busiest month ever in June this year, with an impressive load factor of 95%. The nearly full capacity of their flights indicates robust current demand trends and showcases RYAAY’s ability to capitalize on its high-frequency flight plan. 

Currently up year-to-date by 32.57%, RYAAY has a positive SMA, ROE, TTM asset growth, and solid 0.55x PEG ratio. RYAAY’s last earnings report was a great victory for the airline, as it absolutely crushed analysts’ projections on both EPS and revenue, but particularly on EPS; analysts projected $0.48 per share, and RYAAY came in with a stunning $3.22 per share, beating their forecasts by a whopping 571.58% margin. During this same period, RYAAY showed year-over-year growth in critical areas like revenue (+40.28%), net income (+253.55%), EPS (+262.50%), and net profit margin (+152.01%). With a 10-day average trading volume of roughly 716 thousand shares, RYAAY has an average price target of $150.09, with a high of $180.49 and a low of $132.77; this suggests a potential price leap of more than 82% from where it currently sits. As RYAAY files under the radar, it has 21 buy ratings (and zero holds). 

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