Stocks to buy

The 3 Most Undervalued Airline Stocks to Buy Now: August 2023

With economies rebounding post-pandemic, renewed consumer spending has taken flight. People are again heeding their wanderlust, given the relaxation of travel restrictions. Unsurprisingly, this burgeoning desire to explore has been an incredible tailwind for travel and airline stocks, with investors searching for the top undervalued airline stocks.

Amid the vast sky of opportunities, pinpointing undervalued gems can amplify any portfolio’s trajectory. That said, let’s look at three of the best airline stocks to buy now.

In assessing the top 20 airline stocks on the GuruFocus Screener, the average GF value score was at an impressive 64. The GuruFocus GF Value Score is essentially an estimation of a firm’s intrinsic value based on historical multiples, growth rates and discount rates, enabling investors to determine if a stock is overbought or oversold.

Delta Air Lines (DAL)

Source: David Peterlin / Shutterstock.com

Delta Air Lines (NYSE:DAL) is riding the wave of the current travel boom, soaring to new heights while proving itself as a key player in the space. DAL stock is up over 35% year-to-date, and its momentum will likely spill over to the year’s back end. Despite its impressive rally, the stock remains undervalued across key metrics. For instance, it trades at just 0.5 times forward sales estimates, roughly 63% lower than the sector median.

The second quarter was quite a show for the airliner, posting $14.61 billion in revenues and an 86.11% year-over-year bump in its earnings-per-share figure, exceeding consensus estimates by 11.6%. It delivered record sales in the June quarter; an upbeat guidance was the icing on the cake. Coupled with a groundbreaking deal with its pilots has set a new standard for the industry.

Furthermore, Delta is also warming up to its investors after reinstating dividends. Hence, its strong earnings performance, strategic employee relations and a renewed focus on shareholder rewards make it an enticing long-term play.

United Airlines Holdings (UAL)

September 1, 2019 Burlingame / CA / USA – United Airlines aircraft preparing for takeoff at San Francisco International Airport

United Airlines Holdings (NASDAQ:UAL) is soaring through this year despite the turbulence it faced earlier. Similar to DAL, United Airlines stock is up by more than 40% this year, proving its resilience, especially with a robust showing in the quarter. Revenue grew by an impressive 17% year-over-year to $14.18 billion, and a striking 252% bump in earnings-per-share to $5.03, outpacing analyst expectations by 24.9%. These figures are a testament to United’s powerful growth strategy and ability to navigate the sector’s economic fears and other headwinds.

Additionally, United is embracing the high-flying spirit of college football season by announcing 120 additional nonstop flights. As Covid-19 fears wane and international travel demand reaches pre-pandemic levels again, United is poised to capitalize on its broad exposure to global routes. With more than 120 international destinations and over 210 locations in the U.S., United is in an excellent position to dominate the sector.

Copa Holdings (CPA)

Source: Carlos Yudica/Shutterstock.com

Copa Holdings (NYSE:CPA) stands tall as a formidable force in the Latin American aviation sphere, boasting ownership of giants such as Copa Colombia and Copa Airlines. Nestled in the heart of Panama, the airliner casts a wide operational net, effectively stretching its wings from North America to the vibrant South American territories. Regarding performance, Seeking Alpha tips its hat with a commendable A- Profitability Grade, highlighting Copa’s sterling industry-leading metrics.

The latest earnings report paints an impressive picture. Its second-quarter Non-GAAP earnings-per-share of $3.92 zoomed past expectations by 54 cents. Though its revenue of $809.2 million marked a 16.7% year-on-year ascent, it missed analyst targets by a mere $2.89 million.

Moreover, for dividend enthusiasts, Copa’s reinstated 82 cents-a-share dividend. Hence, with its robust numbers and enviable operational vantage point, Copa Holdings remains on the radar of discerning investors eyeing growth and income opportunities.

On the date of publication, Muslim Farooque did not hold (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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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