Southwest Airlines (LUV)

Probably not a lot of value in the stock. Higher fuel and lar cost is putting pressure on the company and the industry in general. Competition from the ultra-low cost carriers is also affecting it.

Very positive on airlines. He owns Delta instead. Southwest has always been one of the best run airline companies. Competition is limited with only 4 major airlines in the US, and they are very attractively priced. Thinks there is a place in your portfolio for one of these stocks.

(A Past Top Pick Jan 30/17, Up 6%) It has behaved a lot like a value stock but she sees more potential. They have been able to really increase their capacity and connections. They are one of the few US airlines that is growing.

The US airline space has had an enormous climb since Brexit. It has to do with the price of oil. This will be a headwind for the airlines. They have traditionally been a low cost provider. He would wait for a pullback, but be cautious that this could be very volatile.

There are a few airlines she likes. This is one of her favourites. They beat Q4 earnings. They had to add flights for the Super bowl. They may beat first quarter estimates. They are able to add more long distance flights due to less regulatory issues. (Analysts' Target: $62.20).

He thinks you should be careful about valuing opportunities on whether Warren Buffet is buying them. He has historically hated airlines, but is giving his managers more room these days. LUV-N is expensive now in terms of fair market value and he does not see any upside. It will go on sentiment, rather than value.

This is the only one that has made money in the airline industry, for 40 years. They just gave a 33% dividend growth. 4 carriers control 80% of the market vs. 10 in the year 2000. He thinks Q4 will be an inflection point for revenue per available seat. We will get at least 25% growth next year.

(A Top Pick May 21/15. Up 14.1%.) One of his favourite airlines. If the US$ starts to appreciate, this is a name that is going to start becoming important again. You want a name that is mostly domestic or US$ centric in terms of revenues. This has the best balance sheet out there. Very low debt to capital ratio.

(A Top Pick Oct 16/14. Up 49.09%.) This airline has a tremendous balance sheet with the best debt ratios in the business. Executing and operating very well. Lower fuel costs have helped, but you have to remember that the US economy is expanding. He is starting to exit this position.

This, along with the other airlines, dropped about 8%-10% yesterday, based on concerns about capacity and pricing pressures based on too much competition. That was well overdone. It oversold down to the 200 day moving average. All revenues are US domestic, so you don’t have to worry about the US$ tailwinds. Very healthy balance sheet. Dividend yield of 0.81%.

In the last couple of weeks she has started hearing comments on airline capacity being higher and what impact that has on pricing and margins. This one is in a good position and has a low cost structure. The group has had a run and she would not be surprised at a pullback in US airlines.

Fourth-largest US airline. Mainly short-haul type of flights. 100% of its revenues are from the US. They have the most conservative and probably the healthiest balance sheet in terms of debt to capital ratio. Feels recent fears about the spreading Ebola epidemic has moved the stock downwards. Good valuation.