Monday marked the long-awaited reopening of the United States’ borders to international visitors. Pandemic-related travel restrictions introduced in March 2020 prohibited the inhabitants of over 30 countries, including the U.K. and many parts of Europe, from entering the country. With these measures now lifted, for the most part, travel stocks look poised for a profitable fourth quarter.
Airlines, in particular, have reason the celebrate, with multiple companies forecasting huge increases in international footfall this week alone. With that in mind, we have three airline stocks that look set to profit following two underperforming years.
United Airlines Holdings (NASDAQ: UAL) has seen its stock rise over 10% in the last five days. Considering the company lost almost 70% of its value in February of 2020, this news will be welcomed with open arms. The reopening of borders will allow United Airlines to begin reaping reap the benefits of a wide global reach.
According to CEO Scott Kirby, “the headwinds we’ve faced are turning to tailwinds, and we believe that United is better positioned to lead the recovery than any airline in the world.” Plans to increase existing international flight capacity by 10% in 2022 only strengthen the company’s position as we hope to move into a post-pandemic world.
Delta Airlines (NYSE: DEL) has also seen a rise in its share price of over 10% in the last five days. Buoyed by similar optimism, the company looks to navigate out of the pandemic and begin to grow once again. Analysts expect the company to report a loss in Q4, news which the company has fanned the flames on by warning of the impact of rising fuel costs. However, profitability is expected to be restored in 2022 once the demand for air travel reverts back to some form of normality.
The opportunity to invest in Delta while it is still recovering from a rough couple of years will be very appealing to investors. Delta seems primed for growth over the next year as stocks previously hurt by the pandemic thrive once again.
American Airlines Group (NASDAQ: AAL) has seen the highest growth out of all three of these stocks over the last number of days. An increase of over 13% in five days shows the confidence investors have in the world’s largest airline as it looks to rebound. The company reported an increase in passenger revenue for Q3 as domestic flights ramped up, so investors are backing a similar increase once international travel begins to recover.
Analysts expect a 125% year-over-year (YoY) increase in sales for the current quarter, and the company seems confident that a sustained recovery will continue with the expansion of domestic business flights and international long-haul flights. The company has also committed $100 million to accelerate clean energy technologies in aviation which will greatly please ethical investors.
Overall, the airline economy looks set to rebound massively following the pandemic. Already we have seen many stay-at-home stocks, such as Roku and Peloton, suffer declines as the world opens up. Stocks related to the world reopening have seen a resurgence, with AirBnB and Planet Fitness both profiting handsomely. Airlines look set to follow that trend this quarter and into 2022.
Investors should exercise caution, however, as any new variants of COVID-19 could wreak havoc on international borders once again. Rising fuel costs and labor shortages are also issues to keep an eye on, but overall the airline industry looks set to prosper in the short term at least.
Ready to start investing in stocks with huge potential? Check out our list of market-beating companies so you can get on the path to financial freedom. Subscribe now to get a 7-day free trial.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.