SAVE: Join the Rally With Spirit Airlines

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Many airline stocks took a hit last month as geopolitical concerns and Ebola fears caused traders to dump them. As airline stocks began to announce earnings, many of them have reversed course, and the prospects of lower fuel costs are helping to drive them higher once again.

Spirit Airlines 185As oil prices are tumbling shares of the low cost airlines like Southwest (LUV) and JetBlue (JBLU) have been surging towards new 52-week highs.   Southwest and JetBlue are rated “buy” or “strong buy” by Portfolio Grader.

This other airline stock has also joined the rally:

Spirit Airlines (SAVE)

Spirit Airlines (SAVE) has 59 aircraft and flies to 280 destinations in U.S., Latin America and the Caribbean.

Spirit Airlines’ unique pricing system starts with a stripped down bare bones ticket that gives travelers the lowest possible ticket price. Spirit Airlines then charges more for add on services such as snacks, drinks, baggage check and advanced boarding. Spirit Airlines prides itself on being the low cost provider in most of its markets.

The idea is appealing to consumers, and Spirit has grown earnings by almost 40% a year over the past five years. Spirit doesn’t look like it will slow any time soon as most of the analysts are projecting for earnings-per-share growth to continue to more than 30% for the next five years as well.

Spirit Airlines released earnings last week, and Spirit Airlines had another strong performance. Spirit reported record earnings for the quarter with adjusted net income for the third quarter 2014 increased 27.6 %to $1.01 per diluted share compared to 79 cents per diluted share for the third quarter 2013.

Total operating revenue was $519.8 million, an increase of 13.8 percent compared to the third quarter 2013. Spirit Airlines also said that return on invested capital for the full year, ending Sept. 30, was 31.6%.

During the quarter, Spirit took delivery of one new A320 aircraft, ending the quarter with 58. Since the quarters end, Spirit Airlines has taken delivery of one new aircraft bringing the fleet size to 59 aircraft.

Spirit started 10 new flights in the quarter and has announced an additional 7 new flights that will begin service in the current quarter. Spirit Airlines is expected to introduce 11 new routes in the first 4 months of 2014 as consumer demand for low-cost flights allows Spirit to expand its footprint across the U.S.

Spirit Airlines had its fourth consecutive positive earnings surprise, and analysts have been raising their estimates for Spirit Airlines. If oil prices stay low, many analysts will revise their expectations higher for Spirit Airlines in the months ahead as well.

Portfolio Grader has been on top of the strong performance, and Spirit Airlines stock has been a “buy” for the past year. Spirit Airlines stock is currently ranked a “B” grade and is a “buy” at the current price.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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