The friendly skies were quite friendly to investors in 2013. Airline stocks soared this year thanks to rising prices, higher fees and heavy demand. In addition, competition shrank, thanks to mergers that left us with a handful of big carriers and a few discount airlines. That mix resulted in the best operating conditions possible. Delta shares gained 127% in 2013 and were the best-performing name in One-Year Sizzling Stocks.
Will Delta’s (DAL) run continue in 2014? For certain the same operating conditions that existed in 2013 will apply in 2014. In fact, you could argue that demand will be stronger given the global growth story. I see no reason why profits in the coming quarters won’t exceed current expectations. The problem, though, is analysts see profits slipping in 2014 from the 2013 numbers. As such, I see Delta shares trading with or below the market next year.