Trade of the Day: SAVE Stock is About to Take Flight

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Spirit Airlines Incorporated (SAVE) — Although risks are high and price competition is stiff in the airline industry, with extreme fluctuations in demand, Spirit Airlines is overcoming the headwinds. While SAVE stock has been under pressure for the past year, shares soared 5.8% on Tuesday after the low-fare airline company posted fourth-quarter financial results that beat analysts’ expectations on the top and bottom line.

Q4 revenues were up 10% year over year to $520 million versus a consensus estimate of $518 million. And earnings per share of $1.02 surpassed estimates of 99 cents.

For the full year, Spirit Airlines reported 11% revenue growth to $2.1 billion, while earnings jumped 42% to $4.38 per share. Operating margins increased 420 basis points in 2015 to 23.4%, helped by lower fuel prices.

Spirit Airlines should continue to benefit from this trend in the year ahead and has little debt on its balance sheet.

Turning to the chart, after climbing from the mid-$20s in 2013 to an all-time high just over $85 in December 2014, SAVE stock began a decline that erased most of those gains by November 2015.

However, since mid-December, SAVE stock established a complex triple-top, which shares broke from this week. Two buy signals from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR), accompanied the break. It was also supported by high volume and a buy signal from the MACD indicator.

The next resistance line is the 200-day moving average at about $51, which is my short-term trading target and would result in a gain of almost 20%. However, a break of that line could result in a longer-term trade to $60 for a gain of around 40%.

SAVE Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2016/02/spirit-airlines-incorporated-save-stock-trade-of-the-day/.

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