American Airlines Group Inc (NASDAQ:AAL) — American Airlines Group operates the largest commercial airline in the U.S. and is among the lead world carriers as well.
Although the airline had a 4% decline in operating revenues in 2015 and will likely experience a 3% decline in 2016, new management is aboard, and along with lower fuel prices, Standard & Poor’s estimates that revenues will accelerate to achieve 3% growth in 2017. Additionally, an estimate of lower travel costs for passengers in 2017 should stimulate demand.
S&P forecasts stronger profitability, and with a generous share buyback plan that should create more demand for the stock, S&P’s 12-month target of $48 appears achievable.
Technically AAL stock broke its bearish resistance line on Tuesday, a line that had been in place since the November 2015 high at about $47. That line connects to the December high and then the March and April highs.
Its penetration on high volume signals a significant shift in trend from bearish to bullish. Yesterday’s gain confirmed a break of the resistance line and the 200-day moving average at about $38, as well as a minor resistance line at $36.70. A CBR buy signal (my internal indicator) preceded the breakout by five sessions.
Accumulation has been high, and the MACD indicator flashed a long-term change in direction on Tuesday.
Traders should try to buy AAL stock at $39 for what could be a modest, but quick, trade to my target of $45 and a return of over 15%.
Also, investors should consider American Airlines as a long-term, cornerstone investment in the airlines group.
