Reasonably Priced Airline Stock to Watch

American Airlines will report earnings before the open tomorrow

Deputy Editor
Apr 24, 2024 at 2:12 PM
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Depending on who you ask, a recession is either right around the corner or the stock market is ready to rattle off a seismic bull run. As always, the answer is likely somewhere in the middle of those two extremes. But due to the uncertainty surrounding the Federal Reserve’s rate cuts, traders are stuck in a holding pattern until more data defines the country's fiscal path.

Since bargains become popular when times are uncertain, we’d like to introduce a new weekly segment: Cheap Seats. Every week, we will profile stocks under $20 with a market capitalization of at least $2 billion.

These are not outright "buy" recommendations, but interesting names – with cheap overhead – that are worth adding to your watch list. This week, we're taking a look at American Airlines Group Inc (NASDAQ:AAL)

The airliner is announcing its first-quarter results before the open tomorrow, April 25, and is expected to post a loss of 28 cents per share. According to Zacks.com, analysts raised their earnings estimates leading up to the event, which could indicate an earnings surprise. 

Over the past two years, AAL has closed five of eight post-earnings sessions higher, including a 10.3% pop this past January. The stock has averaged a 4.4% next-day move, regardless of direction, which is lower than the 8.6% swing the options pits are pricing in this time around. 

Today, American Airlines stock is down 2.1% to trade at $13.92. The stock has been chopping between $13 and $16 since December and is hovering just above its 2024 breakeven level. Year-over-year, the equity is up 8.5%. 

AAL Apr24

 

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