Delta Air Lines (DAL) — As one of the largest airlines in the world, it should benefit from pent-up demand for air travel. The company recently reported better-than-expected Q2 earnings of $1.04 per share, beating estimates by a penny. It is using cash to lower debt, buy stock back and pay a dividend.
S&P raised its EPS estimate $0.31 to $3.06 for 2014 and $0.29 to $3.51 for 2015. It has a “five-star strong buy” on the stock with a target of $50.
DAL has been in a bull market since November 2012, as the stock found support at its 50-day moving average. In early June, it broke away from the 50-day and drove to a new high at $42.66, only to be beaten back by profit-taking.
Now, following a consolidation at its long-term bullish support line, the stock appears capable of breaking above its 50-day moving average for a challenge of the June high and then a move to S&P’s $50 target. A penetration of the 50-day moving average would be a clear buy signal, so enter a buy-stop order at $39.25 with a trading target of $45 and a 12-month target of $50.