#7 - Southwest Airlines (NYSE:LUV)
The last of our transportation stocks is Southwest Airlines (NYSE:LUV). Cruise line stocks may be the only sector to be the victim of circumstances outside their control as airlines. Just when the economy seemed to be recovering, air travel got whacked by the Delta and Omicron variants of Covid-19.
However, the third time may be the charm. And one reason for that may be the return of corporate travel. Let’s face it. Even if business travel doesn’t return to pre-pandemic level, the industry will take what it can get. And Southwest is in a good position to capitalize on both leisure and business travel.
Depending on the metric you use, LUV stock will look undervalued or possibly overvalued. Investors would be better served focusing on earnings and revenue. If those continue to grow, the valuation will take care of itself.
About Southwest Airlines
Southwest Airlines Co operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2023, the company operated a total fleet of 817 Boeing 737 aircraft; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.
Read More - Current Price
- $31.97
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 11 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $30.78 (3.7% Downside)
Transportation stocks present an excellent opportunity for many types of investors. Many of these companies suffered sharp stock price declines during the pandemic. Many of those stocks are not yet back to pre-pandemic levels. Other investors may enjoy the relative security of defensive stocks that surged during the pandemic and still have some runway ahead. And others may enjoy stocks that offer a dividend in addition to some stock price growth.
However, there are a variety of reasons why you might not want to pick out individual stocks. In this case, you may want to invest in an ETF focused on the transportation index. The largest such ETF is the iShares US Transportation ETF (NYSEARCA:IYT). If you have bought into this ETF at the onset of the pandemic you would be sitting on a 111% gain. And the best performing transportation ETF in 2021 was the Direxion Daily Transportation Bull 3X Shares (NYSEARCA:TPOR) delivering a 105% gain.
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