Trade of the Day: There’s a Lot to Love About LUV Stock

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Southwest Airlines Co (LUV) — With the integration of AirTran, Southwest became the largest domestic airline, based on the number of passengers.

S&P Capital IQ said Southwest has the “best balance sheet in the U.S. airline industry” and noted strong Q4 bookings. Its analysts recently raised their EPS estimates by $0.20 to $1.97 for 2014 and by $0.37 to $2.37 for 2015. They upped their 12-month price target for LUV stock by $5 to $42.

Deutsche Bank AG USA (DB) analysts said Tuesday that the airline industry is expected to see record profits this year. They expect 2015 could be an even stronger year, with net profits forecast to increase to $16.5 billion, from $12.4 billion in 2014, on lower fuel prices. Southwest Airlines is listed as one of the firm’s most favored names.

LUV stock has been a steady performer, holding its bullish support line since September 2013. In early November, it broke from a “V” formation and steadily rose to a new high last week at just under $43.

The recent market sell-off has done relatively little damage to LUV stock, but it is testing its first support line at the bottom of a recent gap at $39.39. The next support is at its 50-day moving average at $36.89.

Try to buy LUV stock under $38 for a trade to $45. Keep in mind that even strong stocks like this can be subject to profit-taking, so it is best to give it a lot of room for normal seasonal fluctuations. Enter a stop-loss order at $32.

LUV Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2014/12/southwest-airlines-co-luv-stock-trade-day/.

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