LUV Stock – Why Southwest Will Keep Soaring

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Southwest (LUV) continues to defy conventional wisdom that airline stocks are a horrible long-term investments. In an industry characterized by constant bankruptcies, restructurings and volatility, LUV stock has been flying high with no signs of losing altitude.

Southwest luv stock photoLUV stock had a roaring 2013, gaining 85% on the calendar year. And so far in 2014, LUV stock is tracking 80% gains through the first nine months of the year.

That’s simply amazing for any company, let alone an airline stock like Southwest. The industry is exposed to big fluctuations in energy prices, high regulatory hurdles and other big-picture challenges … but that hasn’t mattered one bit.

Here’s why Southwest stock has soared, and why LUV stock could keep flying high into 2015.

LUV Stock Is a Cut Above the Rest

Southwest isn’t typically considered an innovator, since the business of airlines hasn’t changed all that much in the last 100 years — unless you count the red tape and security procedures.

But ever since LUV arrived on the scene with its low-cost approach, its super-efficient fleet and its focus on customer satisfaction, Southwest has redefined the business.

Much of the success for LUV stock comes from the simple fact that Southwest remains one the best-run airlines out there, as both a model of efficiency and continued dominance at the top of customer satisfaction surveys; LUV topped the annual airline satisfaction survey again in 2014 for the third consecutive year.

And aside from the well-run operations, the airline business in general has seen a bit of a bounce that has added a tailwind. A merger between a bankrupt American Airlines (AAL) and U.S. Airways consolidated power (and boosted fares) in the industry.

At the same time, we’ve seen a cyclical recovery in travel as the economy mends, and low oil prices keeping jet fuel inexpensive … and it all adds up to a powerful performance from LUV stock.

The result is big gains for many carriers — such as a 21% jump for United Continental (UAL), a 30% jump in Delta Air Lines (DAL) and a 40% jump for regional airline Hawaiian Airlines (HA).

But no stock has flown as high as LUV, and Southwest — with its ability to figure out customers better than anyone else — should continue to outperform as we enter 2015.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/luv-stock-southwest-airline-stocks/.

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