JetBlue Airways (JBLU)
It takes a tough competitor to roll with the myriad shifts in the airline industry and JetBlue Airways (JBLU) might just have what it takes to fly above the turbulence in 2014.
The airline should get a win from the mega-merger between US Airways (LCC) and American (AAMRQ): The Justice Department required the merged carrier to divest valuable slots and gates — particularly at Washington D.C.’s Reagan National — to low-cost carriers. JBLU has kept its budget airline identity while classing up its image, literally — adding premium class service on some transcontinental routes. And JBLU is continuing to upgrade its fleet with more fuel-efficient aircraft.
The airline industry has long been regarded as a tough place to make money — a capital-intensive, low-margin business that soars or stalls based on consumer confidence and fuel-price fluctuations. But JBLU shares have gained almost 50% and still look cheap with a price to earnings growth (PEG) ratio of 0.77 and a forward P/E of less than 13. With a market cap of $2.4 billion, JBLU stock is trading around $8.60 now.