Airline stocks like United Airlines (NASDAQ:UAL), Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL) look ready for takeoff on Monday. So with UAL, DAL and AAL stock all up more than 5%, what do you need to know? And what has airline names rallying?
The story here should be familiar. Airline stocks took a major hit at the start of the pandemic, as recreational and business travel came to a screeching halt. Although demand has started to recover, it is still far below pre-pandemic levels. And with the Covid-19 situation continuing to evolve, such as through emerging strains, some investors are hesitant to approach the sector. However, one analyst dove in today in a big way.
That analyst, Michael Linenberg of Deutsche Bank, upgraded the entire sector to a buy rating today. Although he questioned current valuations, he is confident that airline stocks have significant upside. When it becomes safe and more socially acceptable to fly, more consumers will do so. When they do, airline businesses will improve. Investors who get into the reopening story early will benefit.
Interestingly, the move today comes roughly two months after Linenberg downgraded the sector to a hold. It is clear that recent pandemic trends are supporting the bull case for names like UAL, DAL and AAL stock. Plus, there are other winners today. JetBlue (NASDAQ:JBLU), Spirit Airlines (NYSE:SAVE) and the U.S. Global Jets ETF (NYSEARCA:JETS) are all up in intraday trading.
So what are those trends?
Airline Stocks: What to Know Right Now
Broadly, Linenberg is confident that airline stocks will benefit as the world gets Covid-19 under control. He cites improving statistics for new cases, hospitalizations and deaths. The analyst also thinks that trends toward greater vaccination support the reopening rally. Linenberg is not alone in that commentary. Bank of America similarly sounded the bullish alarm on airline names, and recent studies bolster confidence in Covid-19 statistics.
So what does this mean for investors right now? Well, do your own research and consider the levels of risk you are comfortable with. It is clear that airline stocks will be winners in a reopening rally, but the timeline remains unclear.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.