Airlines

Discussion in 'Stock Market Forum' started by ScooterBrandon, Jul 15, 2015.

  1. ScooterBrandon

    ScooterBrandon Senior Investor

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    Does anyone have positions in airlines? I remember Kevin O'Leary once said airlines were terrible investments and they don't make much money and the industry is very cyclical so stay away.
    I wanted to see if you guys felt the same or if anyone has made any money from them.
     
  2. petesede

    petesede Guest

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    Airlines are going to be my homework for this weekend. They are usually a good play when oil prices are low, but I am not sure yet how much of that is factored into their current price. My belief is that we have 2 years ahead of us of sub $75 oil, which should make airlines a safe medium term play. LUV (Southwest Airlines) is the one I usually go with since they have better than average deals with labor unions and good management. But I need to do a couple hours of homework this weekend before I buy in.
     
  3. baudwalk

    baudwalk Senior Investor

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    Some of the traders on CNBC Fast Money (M-F 5 pm EDT) follow the airlines pretty closely. You might find some of their comments useful. FWIW, I automatically record the show and then spin through it later in the evening. HTH.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I avoid being long on them myself, although some have done well in recent years. I have been known to short them on occasion.
     
  5. atanasster

    atanasster Active Member

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    Not invested myself, the major players seem hammered by the markets. Some on my watch, that you can run through your research this weekend: $AER and $AL. plus some that are related : $PCLN and $EXPE. Let me know your thoughts
     
  6. petesede

    petesede Guest

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    AER, never heard of it til you mentioned it. I hope you were owning it last year when it doubled in a month. For AER and AL, they are just outside my knowledge base and have complicated enough business models that I would be playing catch-up for months. My first thoughts would be their business would benefit for low oil prices, but it would be so far in advance of realized earnings that it isn´t worth playing. Are companies going to be leasing more planes because oil prices, and how long in advance are those contracts. Again, I know nothing about their business models and competition, so I would just be guessing. I am not saying they are not great companies to own, I just think owning them because of low oil prices is probably a stretch.

    EXP and PCLN - There could be some gain there, but their fee is % based, so even if tickets drop in price, it is not necessarily going to help them that much... and there is no certainty that airlines are going to drop their prices because of fuel prices today. If you want to play tourism, I would think hotels and casinos would be more closely linked to fuel prices than ticket re-sellers.

    I am not thinking that far in advance, maybe 1-2 years right now with oil because if Bush wins, no doubt we will have another war in the middle east which changes everything.
     
  7. atanasster

    atanasster Active Member

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    Thats a long outlook for me right now :) This year the great stocks feel very expensive to me and I am mostly investing with a one-month horizon - usually I get out with a 8-10% gain or 5% loss, not the time to be greedy. 2008/9 was for me with a 3/4 years horizon, so many great stocks at bargain prices.

    What do you use to research stocks - technicals, fundamentals ?
     
  8. crimsonghost747

    crimsonghost747 Senior Investor

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    I do not like airlines as investments. I don't know how often you fly but how do you choose which flight to take? For me it's pretty damn simple, I go with the cheapest reasonable option. I fly inside Europe and often need to switch planes in Germany or something but I don't mind, I'd much rather save 100e than have a direct flight. (as long as the change doesn't take more than a couple of hours) And I know that MANY people are just like me.

    So price competition is ridiculously tough. Very few people are willing to pay extra to get that small meal or to get a newspaper, especially when the flights are short. So the only way airlines can compete is to lower prices... not a great business model.
     
  9. richc3

    richc3 Senior Investor

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    Only airline I've invested in was Air Canada and they surged up quite a bit and have room to grow.
    On the US side of things though, Delta has always intrigued me.

    Overall, I have no qualms investing in them.
     
  10. petesede

    petesede Guest

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    I invest long term and just buy and hold good companies for the duration and only keep an eye on big changes within the company or environment.

    , but then I play a little like you .. basically look for 10% in a month or two. I nailed NAT a few months ago.. It is now up 50% in the last few months. I bought TNP a couple weeks ago as a Greece play, and it should get 10% in a month, I am up about 6% already. Those are mostly just for fun and really an intellectual game with a little bit of money on the line. What I look for are good companies that get hit hard in a short amount of time by emotional investors over-reacting to news that doesn´t really affect the company in question. TNP is a good example. it is a Greek company, but has very little ´Greece´ to it´s business... but got slammed, and then held back just because it is from Greece.

    I do think playing oil is where it is at the next 2 years. Oil will stay low, and inflation will stay low, and then the trick is to just find fairly or under-valued companies that will benefit from those two things. In the shorter term, I think TNP is still a good company that will get you 50% in 6 months, if they announce they are moving to the Bahamas, the stock will double this year.
     

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