With fears of flying easing in the U.S. and worries about the war in the Ukraine badly hurting the travel sector having greatly receded, it’s a good time to buy Delta (NYSE:DAL) stock.
Also importantly, DAL stock has been performing well recently, but it’s still far below its recent highs and much lower than its 2019 highs.
As I pointed out in a recent column on United Airlines (NYSE:UAL) stock, data from airlines shows that the demand for flying is increasing, “with domestic leisure travel actually surpassing the 2019 benchmark,” Seeking Alpha reported. Moreover, United Airlines recently reported that business travel was rebounding sharply.
As for Delta itself, Bank of America (NYSE:BAC) earlier today predicted, based on bookings data, that the airline’s revenue guidance could beat analysts’ average estimate. The firm expects Delta to be “bullish on summer demand,” as it believes that airlines in general will be significantly boosted by consumers’ eagerness to devote more of their funds to services. Bank of America has a “buy” rating on DAL stock.
Although I don’t usually make short-term calls, I don’t think it’s a bad idea to buy DAL stock ahead of Delta’s first-quarter earnings which are slated to be released on April 13. That’s because it appears that, given most consumers’ greatly reduced fear about Covid-19, investors are generally being overly cautious when it comes to reopening stocks,
That cautious attitude can be seen in Delta’s share price, which is still nearly 15% below its February high and almost 40% below its 2019 high. At the same time, the recent strength of the shares (they’re up 20% in the last month) suggests that the Street no longer fears that the war in Ukraine will derail travel stocks.
Additionally, the recent reduction of oil prices and the localization, in the last week or so, of the war in Ukraine to the eastern portion of that country may not yet be reflected in Delta’s share price. Consequently, I would not be at all surprised if Delta makes relatively bullish comments about fuel costs and Eastern European travel trends on April 13, helping DAL stock to rally on that day,
Additionally, of course, Bank of America’s prediction about the company’s summer guidance potentially beating expectations is positive for the stock’s post-earnings outlook.
As a result of all of the points that I’ve made, I recommend that investors buy DAL stock.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.