Airline Stocks Need More Than a Summer Travel Surge

Watch out for these headwinds… Published By Money & Markets, LLC. July 10, 2024 Published By Money & Markets, LLC. July 10, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( Airline Stocks Need More Than a Summer Travel Surge Money & Markets Daily, My wife and I recently made our annual pilgrimage back to Kansas for our grandson’s third birthday. In our younger years, my wife would insist we drive 17 hours from the Carolinas or, even worse, 23 hours from our current digs in South Florida — something I’m glad we are too old to do now. Instead, thanks to lower airfares, we're taking advantage of the convenient flight … plus there’s no wear and tear on our vehicle and no arguing over stretch breaks. This trip was seamless. We had an early morning flight to avoid potential delays or cancellations (a fun flight hack for you). Judging by how crowded the airports were, air travel is back after the COVID pandemic lockdowns threatened to stifle the entire industry. Our trip got me thinking about the status of the airline industry in the U.S. What I found out was very interesting… Travel Is Up, But Airlines Stocks Aren't Seeing a Payoff It stands to reason that if demand for something is up, stocks related to it would be up, too. That’s not the case for the airline industry. According to the Transportation Security Administration, the number of travelers passing through U.S. airports in 2024 is at its highest point since 2020: [Turn Your Images On] [(Click here to view larger image.)]( For the week ending June 29, 2024, nearly 3 million people passed through U.S. airport checkpoints — more than 5X those 2020 pandemic lows. Another 2.7 million were screened during the Fourth of July holiday week. One reason for increased travel is ticket prices. According to the latest consumer price index data, the average airfare decreased 6% from the same time a year ago. But airfare declines and more passengers have not translated to stronger performances for U.S. airline stocks: [Turn Your Images On] [(Click here to view larger image.)]( While the S&P 500 has jumped roughly 26% over the last 12 months, the NYSE Arca Airline Index (green line) — an index tracking 16 mainly U.S. airlines — is down almost 28%. The three more prominent U.S. airlines are also lagging behind the broader index: - Delta Air Lines Inc. (NYSE: DAL) — down 3%. - United Airlines Holdings Inc. (Nasdaq: UAL) — down 13.6%. - American Airlines Group Inc. (Nasdaq: AAL) — down 38.3%. Increased costs (think, fuel and staffing) have provided a headwind to airline bottom lines. Let's look at one of those underperforming airline stocks through the lens of Green Zone Power Ratings… --------------------------------------------------------------- [Turn Your Images On]( [NVIDIA, AMD, and the Race for AI…]( NVIDIA is putting its AI tech into everything these days, including video games, movies, robots and even self-driving cars and AMD has seen an astounding 9,162% gain in a little less than 10 years. Many experts believe we’re just entering the start of the AI boom. AI has been called the biggest new industry of the 21st century. Worth a staggering $80 trillion over the next ten years, and Chief Investment Strategist Adam O’Dell saw it coming a long time ago. Recently, Adam uncovered new research that shows a number of promising, high-quality AI stocks that could go on to SURGE in the coming years. [See the details now.]( --------------------------------------------------------------- Green Zone Power Ratings Journey: Delta Air Lines Inc. In 2023, Delta Air Lines Inc. (NYSE: DAL) was one of the largest U.S. airlines by market share. It held 17.3% of the U.S. market — second to American Airlines (17.5%). Despite a 3% drop, DAL stock is also the best-performing major U.S. airline stock over the last 12 months. The company is set to report its second-quarter earnings on Thursday. DAL Moves Into “Neutral” Territory [Turn Your Images On] [(Click here to view larger image.)]( DAL stock rates 43 out of 100 on Adam O’Dell’s Green Zone Power Ratings system. That means we are “Neutral” on the stock and expect it to perform in line with the market over the next 12 months. A year ago, the stock was in “Bullish” territory (as represented by the green line in the chart above), but a late-year dive in the stock price dropped it to “Bearish.” DAL climbed 68% from its 52-week low in October 2023 to its 52-week high in May 2024, but it’s pared back 12% since reaching that high. Regarding individual factors, DAL rates “Bullish” on Value, Growth and Momentum. Its roller-coaster ride over the last 12 months earns it a 29 on Volatility. ([Click here]( to view its full ratings page.) Bottom line: More Americans are traveling this summer, but inflation has cut into airline profit margins in a big way. Higher fuel and employee costs are making it difficult for U.S. airlines to expand their bottom lines. While being one of the best-performing airline stocks, Delta Air Lines has struggled to capitalize on its strong performance at the beginning of 2024. That, coupled with a “Neutral” rating on our Green Zone Power Ratings system, tells me that now is not the time to put DAL in your portfolio. Until next time… Safe trading, [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( --------------------------------------------------------------- Check Out More From Money & Markets Daily: - [WARNING SIGNS AND A "BEARISH" BIG TECH STOCK]( - [2024’S BEST-PERFORMING ETF (MIGHT SURPRISE YOU)]( - [COOLING INFLATION HASN'T HELPED THESE 2 STOCKS]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. 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Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. 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