Best Airline Stocks of 2021

As the U.S. aviation industry has consolidated, industry margins have risen to levels rarely seen post-deregulation of the 1970s. Today, many analysts expect airlines to quickly return to growth and see gains as early as this year. With coronavirus vaccines offering hopes of a faster-than-expected recovery, investors should see airlines soar once again.

The 9 Best Airline Stocks

Frequently Asked Questions

What is the best airline stock to buy?

Generally, the best airline stocks share three essential characteristics:

  • Monopoly over its key routes
  • Quality of its services
  • Discipline over its balance sheet

These are the characteristics that make the top national carriers like Delta (NYSE:DAL) and American Airlines (NASDAQ:AAL) particularly strong. Regional carriers like Copa (NYSE:CPA) also have monopolies over chokepoint routes. With an ability to raise prices on key routes, these airlines have more room to grow margins.

Are airline stocks a good buy now?

Airline stocks tend to outperform during periods of economic recovery. After the 2008-2009 financial crisis, the NYSE Arca Airline Index (INDEXNYSEGIS:XAL) saw its value leap almost 500%. And though airlines have rebounded from their early-2020 lows, they’re still 20% down from the beginning of 2020. With pent-up demand for travel, airline stocks look set to win.

Is it a good time to invest in airline stock?

Airline stocks are still relatively cheap compared to long-term averages. Spirit Airlines (NYSE:SAVE), an ultra-low-cost carrier, trades at just 11 times its long-term price-earnings ratio. And on a price-to-sales metric, the airline industry has historically had one of the cheapest multiples. The industry’s historically low margins are partially at fault — investors tend to price low-return businesses cheaper. But these low starting points also provide far greater upside for investors willing to take larger risks.

Will airline stocks recover?

As the coronavirus pandemic begins to subside, passengers should begin to return to the skies. Analysts now expect travel to return to normal by 2024.

Things, however, won’t be quite the same — as leisure travel outpaces business travel recovery, airlines like Hawaiian (NASDAQ:HA) and Alaska Air (NYSE:ALK) will see passenger volumes return far faster than those that focus on business travelers. It won’t be a smooth ride up, but airline stocks look set to recover as the coronavirus pandemic ends.

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