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Airlines stocks are entering the seasonally strongest period, after having a pretty good correction. It looks like a good trading opportunity.One stock we have blogged about in the past with good success has been UAL Corporation (NASDAQ: UAUA). UAL has had a serious correction, dropping from a January 2007 high of $50 and is now around $35.50.
What is attractive about UAL is that it has a strong franchise name and a boat load of cash and little debt. Finishing up the first quarter with $4.2 billion and just $1.2 billion in balance-sheet debt.
Operating cash flow increased by 38% from the first quarter of 2006 to approximately $626 million.
While there are some capacity issues for the most recent quarter, buying a stock with $4.2 billion in cash, balance-sheet debt of $1.2 billion and generating $626 million in OCF, is just too cheap to pass up. Look for United to revisit its $50 higher.
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Reader Comments (Page 1 of 1)
5-08-2007 @ 6:00PM
B. McKeever said...
The bad news is the company has decided to pay for non-performance bonuses, and pick a fight with the pilots, flight attendants, mechanics, and technical personnel, in all about 30,000 employees.
Moreover, all before the summer travel season.
While Delta employees are Cheering their CEO and United has its employees Jeering its CEO.
Whom would you fly?
United employees are picketing the airports today and the shareholders meeting May 10th in Chicago.
United’s annual report on pg 119 shows a dispute with its independent auditors.
The Auditors on pg 121 stated that there were insufficient financial controls in place.
A second independent auditors report shows United is violating the mechanics contract in outsourcing and is going to arbitration later this year.
Yeah United looks great.
5-08-2007 @ 10:33PM
Steve said...
Right buy airline stocks with fuel going through the roof. I am not a chartist, however if there is one constant airline profits go down as fuel price goes up. It is my guess that now is not a good time to buy airline stocks, any airline stock.
So go back to sleep fella youi are wrong.
5-09-2007 @ 10:30AM
Brian said...
Lets think about this,airlines have raped there employees like a grizzly on a moose.One of the biggest offenders is United.Now with the cost of fuel going through the roof,this summer could get ugly.I will choose to stay away from this stock,and hope im wrong
5-13-2007 @ 11:44PM
Jon said...
The top management at United truly are robbing the company. Stock holders need to stand up and take charge NOW. Tell UAL management enough is enough ! Glenn Tilton should not be taking 37 million dollar bonuses when the company is still recovering, instead the stock holders should be demanding that this pay out to upper management be reinvested into the company to purchase more aircraft and equipment. If the stock holders would stand up to UAL's board and show them who really controls the company then this stock would be a real winner.. In addition UAL management needs to take lessons in employee relations, because from what I have seen the employees of UAL are not very happy !