Wonder if Airline stocks are worth investing into? All airlines have gone through bankruptcy in the last few years except Southwest and American Airlines.
United Airlines IMHO is a diamond in the rough. We only have data from a couple of quarters after bankruptcy and that suggests that the airline is extremely undervalued. The balance sheet has debt but has plenty of Cash as well. Airlines, due to the nature of their business can carry debt against their huge property and infrastructure.
UAUA has a market cap of 3.23 Bil. They might hit 18 - 20 Bil in revenues in 2007 and are in a good position to increase margins just a little so they can earn more income. Taking estimated $6 a share earnings for next year UAUA is trading at a future P/E of 5.
There is another factor that might benefit margins in the short term. Gasoline prices have dropped 16% in September and if you believe in the conspiracy theory that Republicans are ensureing the pricing stays low until the elections get over, then these prices might stay for a while.
Even without this bonus the economy is really improving and Airlines might be have emerging from a very risky environment over the last few years where people can now understand the risks of airlines, accept them and yet invest in them.
All UAUA has to do is keep up their current earnings performance and we should see a 50% appreciation in the stock price in 6 months.
Cheers,
Ahu
Stock Sharks
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1 comment:
if i read your comment when it came out rather than a week later, i'd have made a pretty penny:
http://finance.yahoo.com/charts#chart1:symbol=uaua;range=5d;charttype=line;crosshair=on;logscale=on;source=
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