LUV About to Take Off to New Heights

Southwest Airlines broke from an inverse head-and-shoulders formation


Southwest Airlines (LUV) — This discount airline is the fourth largest in the United States and is structured to provide shorter point-to-point flights. S&P expects LUV to have its margins aided by a recent initiative to deploy flights to more profitable markets and the addition of the Atlanta market.

EPS is expected to increase by 37% to $1.48 in 2014, up from $1.08 in 2013, according to S&P. It anticipates earnings of $1.64 in 2015 and has a 12-month target of $32.

This steady performer has held its bullish support line since September 2013. Early in May, it broke from an inverse head-and-shoulders formation and immediately rose to a new high. Support rests at its 50-day moving average at $24.

Buy LUV under $25 with a trading target of $30. Long-term investors should consider this as a cornerstone stock in their portfolio.

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