Months ago, a good friend of mine asked me about airline stocks.
At the time (this was somewhere back in March), I said to hold off - many of the most popular airline stocks had doubled or tripled in the prior 11 months.
Since then, the same airline stocks are down 30 to 50%.
I think this is an auspicious time to buy an airline stock.
First it was oil prices knocked down 25% in a matter of a few weeks (meaning jet fuel costs just got whacked by a similar amount).
Unlike most tech stocks, and bank stocks like SBNY (from this morning's note), I think the knee-jerk fear generated by the omicron variant has pushed these stocks about as low as I think they're going to go.
More recently though, we have other developments that should help airline companies rack up lots of ticket sales for the upcoming holiday season and beyond:
- Vaccine shots for kids
- Widespread vaccinations elsewhere
- Wage increases for many Americans as businesses continue to "staff up."
- The US government started allowing fully vaccinated foreign nationals into the country started November 8.
- Canada opened its borders to vaccinated travelers Sept 7.
There is a risk of course, if it turns out that the omicron virus is a bigger global health threat. The science of all that won't be known for another week or so, last I heard.
But at least based on the anecdotal stories in South Africa, while the virus appears to be very transmissable, it doesn't appear to be more lethal to an already- vaccinated individual.
So the bet here is that, unless the absolute worst happens - a new "second pandemic" (which doesn't seem likely), I think we could see record amounts of air travel through the holiday season, regardless of immediate concerns folks might have about omicron.
If I'm right, all the airline stocks should rise nicely now and in coming months.
I'm going to put 2 of them in the goodBUYs portfolio...