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Jim Cramer - Mad MoneySouthwest AirlinesLUVDON'T BUYSep 06, 2023

Higher gas prices are pressuring their margins while revenue per seat mile is down alot. Big business is getting hurt by the sudden rise in crude oil prices.

Jim Cramer - Mad Money

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$29.97

Stock price when the opinion was issued

$47.97

As of Jun 18, 2026. Market Open.

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COMMENT

Sure, there's a travel boom, but the airlines haven't fully benefit due to major unreliability problems. For example, LUV cancelled 16,000 flights over the holidays last year due to bad weather and technical issues. Just last week, technical problems led to nationwide delays. Pity, because LUV has long held a good reputation, and he likes Southwest.

WAIT

It used to be best of breed, but it suffered operational issues last year (the pilots union nearly mutinied). The CEO has stepped down, but he will wait till they report Thursday.

BUY

options There's been an acceleration in options action in airlines here, driven by fuel costs. He likes the CEO of Southwest. The market bought 17,000 of the May 15 calls. He gets a little extra time, a month, when it's usually 1-2 weeks long, so he likes this. A tailwind: people are getting more comfortable flying, and when people don't need to wear masks when flying we will see a nice move up in airline stocks.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Oct 28/21, Down 10.7%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with LUV has triggered its stop at $42. To remain disciplined, we recommend covering the position at this time. We will look for better opportunities. When combined with the previous buy recommendation, this results in a net investment loss of 15%.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK

Stockchase Research Editor: Michael O'Reilly We reiterate LUV as a TOP PICK. Recently reported earnings showed improvements fast than analysts expected. With forward EPS expected at over $2.50 per share, the company is expected to be valued at under 19x earnings. We also like that it has continued to build cash reserves, while paying down debt. We continue to recommend a stop at $42, looking to achieve $64 -- upside potential over 33%. Yield 0% (Analysts’ price target is $63.62)

COMMENT

It reports Tuesday. Easing travel restrictions will help. LUV is okay, but United has more international flights.

BUY

It's the best-run American Airlines with the best routes. It's been beaten up, so pick up shares. FDA full approval of Pfizer's Covid vaccine will help.

BUY

Reopening stocks have come off as the Delta variant increase Covid cases. As cases peak, caller expects another run-up, so is it too early start a position in LUV? No, it isn't. Buy this. The CEO is doing a great job. The stock is selling over fears of no travellers, but the TSA travel numbers disprove this--people are travelling.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK

Stockchase Research Editor: Michael O'Reilly LUV recently reported EPS of $0.57, after receiving $348 million in payroll support. Management noted June was a turning point in demand. Analysts expect next year's annual EPS to exceed $3.25, putting the stock at 16x forward earnings currently. We would buy this with a stop loss at $42, looking to achieve $70 -- upside potential over 33%. Yield 0% (Analysts’ price target is $69.98)

BUY

Any runway left? It's at $61, and he says it'll go to $75. He recommended this in January at the start of the reopening and still recommends it.

RISKY

The airline sector is acting well. Despite the great recovery off the bottom, it doesn't reflect damage done to balance sheets. Will take time to work through. Giant wave of discretionary spending on travel once we come out of the pandemic. Short-term, the setup is good, ready for another leg higher. Other groups have a better setup. Be careful.

BUY

Several airlines qualify for the reopening play, but LUV boasts a CEO is smart to nail down new routes now. American Airlines is great, too, but not its balance sheet. LUV also benefits from the oil patch getting better.

COMMENT

He just interviewed the CEO who did not sound bullish at all. Don't buy this above $32.

COMMENT

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