Transportation

3 Top Airline Stocks to Buy Now as Jet Fuel Prices Continue Plunge

Alaska Air

This company is the second top pick at Cowen, and it broke out nicely in July and looks poised to trade even higher. Alaska Air Group Inc. (NYSE: ALK) is the parent company of Alaska Airlines, and it reported impressive traffic data buoyed by strong demand. The company serves more than 100 cities through an expansive network in Alaska, the Lower 48 states, Hawaii, Canada and Mexico. Despite recent challenges by other carriers for superiority in the Northwest, the company has strong customer loyalty, which has contributed to outstanding earnings and revenue growth.

The carrier recently signed a deal with Icelandair to make their frequent flier programs available to each other’s customers. That includes reservations, one-stop check-in, baggage checked to its final destination and the ability to earn points on the airlines’ respective flights.

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Alaska Air investors are paid a 1% dividend. The Cowen price target is $90, and the consensus target is at $89.29. Shares closed Monday at $78.11.

Spirit Airlines

The company is an ultra-low-cost carrier that sold off big from the spring time highs and is offering investors the best entry point in a year. Spirit Airlines Inc. (NASDAQ: SAVE) was named by Air Transport World as the Value Airline of the Year at the 41st Annual Industry Achievement Awards ceremony earlier this year. The carrier’s super-low prices, which are way below industry standard, allow customers to pay up to choose additional amenities.

Spirit has seen a 40% growth in customer satisfaction, according to internal surveys. This growth has also led to Spirit being included in the Department of Transportation monthly Air Travel Consumer Report beginning this year. While the absolutely no-frills airline is not for everyone, it has a loyal customer following, which continues to grow.

The Cowen price target is $60, and the consensus target is much higher at $75.60. The stock closed Monday at $47.29.

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While nothing is ever guaranteed on Wall Street, the possibility for these top companies to all produce outstanding third-quarter results is very good, especially with two of the months of the quarter at the height of the busy summer vacation travel time. While late August and September have been difficult for investors, the fourth quarter could provide solid upside.

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