This Top-Performing Industry May Surprise You

Try this one out on your family and friends: ask them to name one of the top three best-performing industries of the past three months. You’ll likely get an assortment of answers, but we bet major airlines won’t feature in there too often.

But it’s true. The industry comes in at #3 over the past three months, with carriers like AMR Corp (NYSE: AMR), UAL Corp (NYSE: UAUA) and US Airways (NYSE: LCC) all racking up huge gains.

This is a far cry from the airlines’ “winter of discontent” in early 2009, as demand evaporated and credit froze up, extending the worst downturn in the industry’s history.

But new research from Morningstar shows that even the most battered of industries can still produce gains for investors. The firm tracked 10 funds with

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JetBlue Airways Corporation (NASDAQ:JBLU) needs no introduction to Master Picks subscribers.  UBS upgraded five major airline stocks on Friday and of course left out JetBlue.  Thus the Masters are once again going to bat for JetBlue, which happens to be the only airline company that has 1.1 million followers on Twitter, more than any company except Whole Foods (...

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July 24, 2009

Dow 9,093.24 +23.95 +0.26% Nasdaq 1,965.96 -7.64 -0.39%S&P 500 979.26 +2.97 +0.30%

Financial News:

Airline stocks rose Friday, soaring above a sideways broader market, a day after three more carriers reported second-quarter profits.

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As the U.S. dollar remains strong some industries traditionally benefit – travel being one of them. And I’ve uncovered two stocks uniquely poised to profit…

The summer sun is seducing stir-crazed American families tired of penny-pinching. Add to that a strong dollar and I predict that those who can will travel.

Now, as swine flu continues to make the news, it will perhaps prompt some to avoid cruise lines and foreign travel to “high-risk” destinations.

That leaves European and domestic travel and as airlines have taken a hit lately, I chose that industry to sort through for just the right bargain.

JetBlue Airways Corporation (NASDAQ:JBLU), Deutsche Lufthansa AG (ADR) (OTC:DLAKY) and Air France - KLM (ADR) (OTC:AFLYY) look to be ready to bounce, but not as high as these two airline stocks…

Cleared for takeoff

On the domestic front, AirTran Holdings Inc. (NYSE:AAI) has felt the recession like other airlines. It announced

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GM Cans Mid-Size Trucks; Treasury Yields Soar to 7-month High; Airlines Grounded by $9 Billion Loss; Copper Sinks as Dollar Rises; Supreme Court Delays Chrysler Sale; McDonald’s misses estimates; Apple debuts new iPhone

After repeated attempts to sell its medium-duty truck operations,General Motors Corp. (OTC: GMGQ), yesterday (Monday) said that it would halt their production by July 31. Reuters reported. “After four years of working with multiple potential buyers, General Motors has decided to wind down its medium-duty truck operations,” the automaker said in a statement.  GM plans to cease production of Chevrolet Kodiak and GMC Topkick. The automaker sold about 20,000 of the vehicles last year, down from roughly 30,000 in 2007, as the U.S. economy sank into a deep recession. Yields on two-year treasuries soared to the highest level since November, as investors expressed concern that record issuance of U.S. debt may overwhelm demand ...

With the recent transportation-themed launches, Claymore seems to be trying to develop a theme around the sector.

 

Claymore Securities is digging into the battered transportation sector more with plans to launch the first exchange-traded fund focusing on the airlines industry.

Next month, the ETF provider says the Claymore/NYSE Arca Airline ETF should be ready to trade. The announcement comes after Claymore earlier this year launched the Claymore/Delta Global Shipping ETF (NYSE Arca: SEA).

Both ETFs fit within the area of transportation portfolios, of which there are only a handful of ETFs. The biggest is the iShares Dow Jones U.S. Transportation (NYSEArca: IYT). IYT is the only transportation ETF with a significant level of assets.

The first-mover advantage does exist for the airlines ETF (as it did in the case of SEA), since there is no airline-specific ETF in the U.S.

Claymore's SEA has not seen the type of early success

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With the collapse of oil prices the Transportation sector should be in position to benefit; the question is whether the Airline industry has the capability to do so? The sector has been surprisingly robust since bottoming in July; the Dow Jones US Airlines Index has made repeated challenges on its 200-day MA but still hasn't found the momentum to break through. But at least it is challenging its 200-day MA, something none of the leading indices have been able to get anywhere close too as they struggle around their meager 20-day MAs.br /br /span class="fullpost"Some commentators viewed the OPEC cut in crude output as a reason to a href="http://seekingalpha.com/article/101740-time-to-short-airlines-as-opec-cuts-crude-output"short/a on the assumption of rising oil prices; although the Republic Airways Holdings (strongRJET/strong) used as the example failed to reverse from resistance as anticipated on the news.br /br /a href="http://2.bp.blogspot.com/_WWGUfU1tOjI/SRq8LiGLX5I/AAAAAAAAAkI/F0qvQGQweiY/s1600-h/RJETNov11.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 179px;" src="http://2.bp.blogspot.com/_WWGUfU1tOjI/SRq8LiGLX5I/AAAAAAAAAkI/F0qvQGQweiY/s320/RJETNov11.png" border="0" ...

Airline stocks are enjoying a sharp upswing today. The industry is recovering strongly as fuel prices tumble. And investors are also encouraged by the Delta (NYSE:DAL) and Northwest (NYSE:NWA) merger. But Andrew Snyder says this remains a high-risk sector for stock investors.

More from Today’s Financial News:

After nearly a decade of getting kicked around by the nation’s investors, airlines are finally starting to get some positive attention. More importantly, the barrens of the friendly skies are finally starting to look like profitable ventures.

Notice, however, that I “starting” to “look” like profitable ventures. As of last quarter, the only major airline to post a profit was AMR Corp. (NYSE:AMR), the owner of American Airlines. And its earnings were a mere pittance of total revenues.

All the rest, companies like Southwest Airlines (NYSE:LUV), Delta Air Lines (NYSE:DAL), and United Airlines (NYSE:UAUA), all lost significant

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Shares of Northwest Airlines Corp. (NWA) jumped 10.63% on Wednesday morning after chief executive Doug Steenland said that he expected the merger with Delta Airlines (DAL) to be wrapped up by the end of this year in spite of opposition from labor unions.

He added that Northwest can reap profit if crude oil price stabilizes near the $100-mark. According to Reuters, Steenland refuted any doubts that the credit crunch will cast a shadow on the merged airline as the entity would have $6 billion in cash on closing.

Delta is also up 11.14% a day after AP reported that airline stocks were some of the star performers in the third quarter, with most major carriers clocking double-digit percentage hikes.

"NWA" Free Stock Analysis: Buy? Sell? Hold?"DAL" Free Stock Analysis: Buy? Sell? Hold?Zacks Investment Research