Investors consider the aviation industry a relatively risky form of investment. This is due to a number of factors, including the fact that it requires a large amount of cash for operations, the industry is cyclical, with some parts of the year being better for passenger travel than others, and it is a very competitive market.
The airline industry is also subject to issues regarding travel delays. On July 19, there was an IT outage in which CrowdStrike (NYSE:CRWD) was performing a mass software update. A faulty update knocked millions of Microsoft (NASDAQ:MSFT) systems offline, causing major stalls in regular aircraft operations. This resulted in major losses for the industry, such as Delta Air Lines, which lost approximately $500 million from the incident.
Many of the most notable airline stocks have performed poorly this past year. However, due primarily to the abovementioned issues, that doesn’t mean all investors should write off the entire industry. The stocks below have reported revenue growth within 2024 and still have upside potential, especially following the recent dip in the market.
SkyWest (SKYW)
SkyWest (NASDAQ:SKYW) is a regional airline with a fleet of approximately 500 planes that operates passenger and cargo transportation. It also offers aircraft leasing and charter services.
Over the past year, it has been one of the only airline stocks to report positive returns, with its share price increasing by 61%.
On July 25, it reported earnings for the second quarter of 2024, in which it stated that total revenue increased by 19% and net income rose nearly fourfold to $75 million year-over-year. Block-hour production for the airline also grew by 12% within the same time period.
SkyWest beat earnings expectations and is by far the best airline stock for investors to buy at the moment. It’s still trading at a fair valuation, with its forward P/E ratio being 10.42, while the sector average is 18.78.
It is positioned to continue growing within a crowded industry and offer a solid investment for any investor seeking to invest in the aviation industry.
Copa Holdings (CPA)
Copa Holdings (NYSE:CPA) operates a fleet of roughly 100 airplanes and offers cargo and passenger transportation services throughout North, South, and Central America.
Similar to many other airline stocks, Copa Holdings’ share price has fallen by 26% over this past year, due primarily to downward pressure from the industry as a whole.
On May 15, CPA reported earnings for the first quarter of 2024, and it stated that total operating revenue increased by 3% and net income rose by 45% compared to the previous year. Compared to Q1 2023, total passenger traffic grew by 7% in Q1 2024, which continues to grow for Copa.
Copa Holdings offers a strong dividend yield of 7.66% on an annual basis. Its most recent quarterly distribution was for one dollar and sixty-one cents on June 14.
It is also trading at a fair valuation, with a forward P/E ratio of 5.12, while the median sector forward P/E is 18.78.
Copa Holdings has reported strong earnings and provides decent capacity growth. Making it a solid investment for many investors.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) provides air transportation for cargo and passengers domestically and internationally. It operates various travel agencies and provides aircraft maintenance services. Its fleet consists of over 1,200 airplanes.
On July 11, DAL reported earnings for the second quarter of 2024, stating that total revenue increased by 7% and net income fell by 29% to $1.3 billion year-over-year.
Over the past year, its share price has fallen by 11%, making it one of the best-performing major American airlines.
DAL still offers investors room to grow, especially because it is undervalued. Its forward P/E ratio is 6.36, while the industry average is roughly 18.78.
With overall revenue growth in this latest quarter and once the financial struggles following the Crowdstrike IT outage begin to subside. DAL is still attractive to investors mainly because of its strong cash flow generation.
As of this writing, Noah Bolton held a LONG position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held long positions in CRWD and MSFT.
