Airline stocks have been hammered. Here’s how to go bargain hunting now.

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Airline stocks are valued cheaply relative to the S&P 500 and are expected to grow sales and profits much more quickly than the index through 2025

This is a difficult time for the airline industry, but that is nothing unusual from the perspective of investors. One thing anyone who has flown recently can agree on is that demand for air travel is strong. When the industry is humming, investors who get the timing right — going in when the broad market shies away — can book tidy profits.

A recent broad decline and a typical discount JETS pulled back 4% on Wednesday after United Airlines Holdings Inc. UAL, +1.88% reported third-quarter results that were better than analysts expected but also lowered its outlook for the fourth quarter because of the Israel-Hamas war. United’s shares fell 10% for the day.

But there is hope for JETS Keeping in mind that JETS has traded considerably higher, even recently, it might be interesting to compare expectations for its component companies’ revenue and earnings growth with that of the S&P 500, again based on weighted estimates among analysts polled by FactSet: Screening airlines held by JETS JETS is designed to track the global airline industry with a focus on U.S. carriers. But it also holds shares of aircraft manufacturers, terminal operators and providers of travel-booking and other related services.

If we confine our screen to the airlines, it might help investors to know which companies are expected to operate their core businesses of transporting passengers and cargo most efficiently. We can calculate gross profit per available seat kilometer by subtracting estimated operating expenses per ASK from estimated total revenue per ASK.

 

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