Top 4 undervalued aerospace stocks to buy before 2023
The best time to invest in airline stocks may seem strange at the moment.
In one year, aviation fuel prices have increased by over 126% due to the COVID-19 outbreak. The ETF that tracks the aviation sector, the US Global Jets ETF (ticker: JETS), fell 9.3% between April 18 and May 18. Despite the outbreak and rising fuel prices, airline stocks could still thrive in the long run.
According to Morningstar analyst Burkett Huey, airlines like Delta have maintained relatively stable revenue despite a 120% sequential quarterly spike in COVID-19 cases this year “indicates that consumer travel is significantly less susceptible to COVID-19.” 19 than they were in previous quarters”. he says.
Here are eight top airline stocks to buy in 2022 if you’re willing to endure short-term turbulence in exchange for long-term gains.
South West Airlines
The epidemic has hit companies in the aviation sector hard. In addition to continued travel restrictions and massive declines in passenger numbers, airlines are also facing record fuel prices. As a result, several airline stocks are still trading below their pre-pandemic levels.
We think companies like Southwest Airlines are undervalued and therefore a good investment for your portfolio at this time. Despite the risk inherent in the industry. Southwest Airlines stands out among several airlines now selling at a discount, primarily due to its relatively stable balance sheet.
In times of increased travel restrictions, it ensures that its domestic and international route growth program continues to grow.
Southwest Airlines’ stock price move in April 2021 exceeded its pre-covid value. However, the share price has fallen sharply since then. As a result, Southwest Airlines’ stock price has fallen nearly 25% over the past year.
Boeing has become a major player in the military and aerospace industries. Several Boeing companies are involved in the design and development of commercial and military aircraft as well as the production, sale and maintenance of these aircraft. One of Boeing’s best-known commercial aircraft, the Boeing 737 Max (the fourth generation of the Boeing 737), is used to transport passengers around the world. So chances are you’ve flown a Boeing 737 Max at some point in your life.
However, the outbreak has weighed on Boeing’s share price as a major contributor to the tourism sector. In response to COVID-19, Boeing has seen a decrease in aircraft orders and a decrease in the frequency of Boeing maintenance. Boeing has been on the wrong track for more than two years due to its own injuries and the emotion around the outbreak.
When Boeing appeared to be enjoying an expected travel season, inflation put a damper on those hopes. Increased spending on fuel and labor appears to be the last straw as Boeing shares are currently trading below their March 2020 low when the market first fell on news of the epidemic. Shares fell to their lowest level in more than a decade, trading at $155.
Boeing’s debt quickly snowballed, justifying the company’s stock to be sold at a discount. In contrast, Boing appears to be one of the most undervalued companies in the market. It should be noted, however, that Boeing’s long-term bullish argument is still intact. Boeing is part of a very successful duopoly as a key aircraft manufacturer. Air travel demand is expected to grow 2% annually over the next two decades, even though Boeing’s recent track record has been less than stellar.
Boeing will face considerable challenges in the months and years to come, as inflation is expected to rise and recession is looming. That being said, short-term challenges could present investors with one of the most undervalued companies in the market today. As a result, investors may discover an attractive entry opportunity for long-term play when short-term storms subside.
United Airlines Holdings Inc. (UAL)
The first quarter of 2021 saw United Airlines earn $7.6 billion in revenue. Higher production and capacity estimates could offset higher oil prices, allowing Huey to maintain a fair value estimate of $57 per share, despite lower first-quarter revenue from 2019.
To some extent, United Airlines may not be able to recover from the pandemic as quickly as national carriers due to its global focus.
As overseas travel continues to grow, Huey expects this to be a boon for the airline through 2023. Huey says, “We believe United has much higher regulatory uncertainty than airlines. competing airlines due to its greater exposure to overseas travel, and we believe the summer of 2022 will be a crucial test of the resumption of international travel for United. —Huey
Delta Air Lines (DAL)
When it comes to buying airline stocks right now, one of the best in Delta. When the pandemic began, the company had the best financial position of the three major incumbent carriers. United Airlines’ finances were in the middle of the pack, while American Airlines was the worst of the three. As a result of the outbreak, Delta now has a significant competitive advantage over United. The return of United flights to its main hubs has been delayed somewhat.
Discount carriers like Southwest Airlines and JetBlue Airways Corp. (JBLU) were able to take advantage of this and target United at its main operating hubs. While American Airlines has lost its grip on New York, Delta has expanded its presence in Los Angeles and operates a virtual empire out of Atlanta.
Due to rising fuel prices and wage inflation, Delta passed on these costs and exceeded FactSet’s current sales forecast by 6.5%. Therefore, there is a substantial opportunity for Delta to return to pre-pandemic profitability levels.