Delta Air Lines Inc (DAL)

Upgraded today. It generates a lot of free cash flow and it's paying down debt which they need to complete before there's a recession. He sees upside.

There is lots of pessimism in airlines now and airlines are trading at 2020 prices even though the situation is much better. It is the best managed airline in North America and rated the number one airline for the past several years by the wall Street Journal. It is trading at 5 1/2X this year's and next year's earnings. 
He also talked about Air Canada which is also at an attractive price. The demand is roaring back but the capacity is well down from 2019. Advance ticket sales are way up. In general the airlines are keeping the supply tight.  
Buy 22  Hold 0  Sell 0

This and United are the two airlines, but he wouldn't own any airline. It's hard to make money in this sector. Very competitive, huge costs and constant changes (loads, passenger levels).

It reports Thursday. DAL have pre-announced their downside already. Shares are beaten down a lot. Can't find a reason to buy this.

He wouldn't sell a share. Operations and results vs. two years are much much higher. Earnings estimates for 2023 are 30% higher than when the year started. Trades at 6x forward.

Made a major market low before the market actually bottomed in October 2022. Took out previous resistance from 2022, and poised to test 2021 highs, very positive.

Their balance sheets, but these companies are working through that. Delta is his pick here.

DAL is up 41% YTD. It reports July 13, with expectations of $14.3B sales and $2.33 EPS. Earnings could double this year on higher fares and lower fuel costs. Debt is still high at 4X cash flow but that is common for the sector. It remains very cheap at 7X earnings and continues to benefit from the travel recovery. A bad recession could hurt, but recent economic numbers have been fine. We like it today.
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Passenger counts are through the roof. Estimates for airline stocks keep rising, but they've gotten no love. He's bullish airlines.

Most airline stocks are trading near their 2020 levels despite the major increase in business. Delta is thought to be the best managed airline in North America and this is backed up by a number of surveys. It is a favourite of Wall Street analysts. It is trading at 6X this year's expected earnings as compared to a historical level of 9X so it is well priced. It does not pay a dividend.    Buy 21  Hold 0  Sell 0

Does not like airline industry.
Very hard industry to make money in.
Would not recommend buying.
Very fickle and high volatility.

Not worried about tomorrow's report, because he strongly believes in the CEO. As for AA's guidance today, AA actually increased their estimates last month. The problem is that street's estimates got ahead of itself. Wants to know how international travel is doing this year, after domestic travel did gangbusters last year.