Edging out Delta Air Lines (DAL) and Copa (CPA), United Airlines (UAL) earns top billing among airline stocks. Boosted by estimates of 226% earnings growth this year, UAL stock is trying to launch a breakout with its relative strength line already entering new-high ground.
United leads all airline stocks with the highest-possible 99 Composite Rating. Delta and Copa earn near-perfect scores of 98, outpacing peers Ryanair (RYAAY) and American Airlines (AAL), both of which sport a 94 Composite Rating.
UAL stock, Copa and Ryanair have each landed a spot on the IBD 50.
Impressive recent growth and strong 2023 estimates for the airline industry could mean blue skies on the horizon, especially as the market indexes rebound off their key moving averages. Recent action has lifted the cruising altitudes and flight paths of United and other airline stocks.
United Rides Historic Boeing Order To New Heights
On Dec. 13, United Airlines unveiled a historic order to purchase up to 200 new 787 Dreamliners from Boeing (BA). The firm order for 100 new 787 Dreamliners — plus options to add 100 more — marks the largest widebody aircraft order by a U.S. carrier in commercial aviation history.
While BA stock immediately climbed on the news, United initially skidded. But UAL stock soon began to rebound, soaring for eight consecutive up days starting Jan. 4 in the buildup to earnings on Jan. 17.
Although based on comparisons to the prior-year quarter that showed a loss, United Airlines reported 254% EPS growth to $2.46 a share. For Q1, Wall Street expects the airline to post 116% growth and a 226% EPS increase for the full year.
While sales growth has slowed from stellar triple-digit numbers several quarters in 2021 and 2022, United still generated a 51% revenue gain in Q4.
United Leads Airline Stocks In Demand
United’s rise in fund ownership from 720 funds in March 2022 to 881 in December indicates demand for shares.
The table below also shows how UAL stock compares to Delta Air Lines and others in terms of institutional demand.
The Accumulation/Distribution Rating tracks buying and selling by mutual funds and other large investors over the past 13 weeks. United’s A- rating indicates heavy buying during that period.
The up/down volume ratio covers 50 days of trading, dividing total volume on up days by total volume on down days. A number above 1.0 points to demand.
|Company||Accumulation/Distribution Rating||Up/Down Volume Ratio|
|Delta Air Lines||B+||1.4|
UAL Stock Makes Flight Plan For Buy Zone
Holding the bulk of its gains following its surge in January ahead of earnings, UAL stock is putting the finishing touches on an early stage flat base. United is testing its 53.36 buy point. Look for heavy volume to kick in to confirm conviction in the move.
See if United Airlines and its peers can weather any market storms and continue to fly higher.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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