Recently, airline stocks took a modest hit in the midst of a market-wide correction, but most analysts attribute some of the fall to fears over Ebola. I guess if a passenger flying from West Africa to JFK starts throwing up in his seat and dies, it’s enough to rattle a few nerves.

And let’s not forget the Ebola nurse boarding a plane to Cleveland … or the fact that Obama’s “Ebola Czar” hasn’t shown up to any Ebola meetings yet.

Remember, every zombie movie begins with some guy in a white coat telling us everything is under control.

The point is that airline stocks sold off on the news, making now a great time to grab a few shares. Any time a piece of news tanks a sector, and that news has nothing to do with the long-term viability of the sector or individual companies in it, you should buy.

With the Ebola virus, the worst-case scenario — other than the zombie apocalypse where nobody will be flying anywhere — is near-term disruption of air travel.  However, because airline stocks have gone through bankruptcy and reorganized their debt, they aren’t in danger of going under again. This would be a near-term matter, not the long-term devastation that hit the travel industry after 9/11.

That means you start buying on dips, and add as the news gets worse. I don’t believe we have seen the last Ebola virus scare.

Let’s take a look at the airlines to see which present the best values and best plays in such a scenario. On a valuation basis, you want to look at cash flow more than EPS, because net income can fluctuate a lot. Consequently, I prefer using the EV/EBITDA ratio.

So let’s look at American Airlines Group (AAL), Delta Air Lines (DAL), United Continental Holdings (UAL), JetBlue (JBLU) and Southwest Airlines (LUV).

Airline Stocks

American Airlines: American is still struggling post-merger. The company’s $10 billion in cash and short-term investments is offset by $15 billion in debt, and free cash flow is negative. Trailing 12-month FCF is a disaster at negative $7.7 billion. The EV/EBITDA ratio is 6.6 for the TTM. The airline said it saw a “measurable impact” — as in, declines — in bookings last week as a direct result of Ebola being in the news. The declines are specifically attributed to Congressional hearings on the disease, as bookings fell the day after that. Fortunately, the declines only appeared to have lasted a day. As far as the underlying business, I’ve noticed a significant jump in fares along all the American routes I routinely travel. I guess the merger did decrease competition after all.

Delta Airlines: Delta is in decent shape, with $4 billion in cash and investmetns, and $9 billion in debt. The company is generating positive FCF, to the tune of $2.6 billion in the TTM, and DAL stock sports an EV/EBITDA ratio of 6.2 for the TTM. The airline said it has not seen any impact on its business from the Ebola scare. Delta went on CNBC way back in August to assure travelers in was on top of screening procedures.

United Continental Holdings: United’s FCF is slightly negative, at about $200 million for the TTM. It has $5.8 billion in cash, which is offset by $11 billion in debt. UAL stock’s EV/EBITDA ratio is 6.2 for the TTM. United was that it was the airline that flew the late Thomas Eric Duncan into the U.S. But it contacted all passengers and tested the crew and came up empty.

JetBlue: JetBlue has $40 million in FCF over the TTM. Its $800 million in cash is offset by $2 billion in debt. JBLU is in the same EV/EBITDA ballpark as other airline stocks, at 6.5 for the TTM. The airline benefits from scares like this because it has such a limited number of flights compared to the big companies. Anecdotal experience on Jetblue from myself and friends has not been kind. We’ve all experienced incredibly long delays and mismanagement. Of course, these are limited experiences. However, because of Jetblue’s limited scheduling, if your flight is delayed, it’s difficult to just swap to another flight as you can with the other airlines. Insulation from Ebola fears makes JBLU stock a less attractive play.

Hawaiian: Hawaiian Holdings (HA) is the cheapest of the lot with an EV/EBITDA ratio of 5.1. It has $225 million of negative FCF in the TTM, and its $580 million in cash is offset by $915 million in debt. Hawaiian Holdings struggles with the same issues Jetblue does being a limited schedule carrier, but it is also very removed from anything involving Ebola. HA stock should be minimally affected, which makes it less attractive than other airline stocks.

Southwest Airlines: Of course, that leaves what I expect to be the best for last. Southwest (LUV) has $4 billion in cash and investments, with only $2.1 billion in debt. Southwest is routinely the only airline with strong FCF, generating $1.5 billion in the TTM. LUV stock’s EV/EBITDA ratio is 7.4, the highest of the group. With $350 million to $1 billion of FCF annually. Southwest has said it hasn’t seen any impact whatsoever from Ebola news. That’s why I consider Southwest to be the Teflon Airline. Nothing takes it down. It’s 80% unionized, yet remains the only airline to never have a labor action. That’s because it has a fantastic company culture.

You obviously want to own Southwest, which has always been the choice from my perspective. I think you also pick up Delta, since it’s the most financially sound from a cash flow perspective.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at pdlcapital66@gmail.com and follow his tweets at @ichabodscranium.