Daily Stock Pick for July 6, 2023

The pandemic seems so far away for most of us now that even the term “post-pandemic” seems dated.

Yet, for many industries, the pandemic’s effect has yet to wear off.

That may be a bad thing for them, but it’s an opportunity for us – because it means we can take advantage of the post-pandemic recovery.

And that’s exactly what’s happening with today’s stock, which although having risen by 22% over the past month and 42% this year, is still trading at only half of its pre-pandemic levels.

That creates substantial upside as the industry recovers – both in the shorter and longer term.

And today’s stock currently has among the lowest price-to-earnings ratios in its industry group – giving it the strongest upside potential.

American Airlines Group Inc. (AAL)

Airline stocks have been solid performers this year thanks to spiking travel demand – something you might have just experienced over the 4th of July weekend. Numerous delays may have kept many passengers grounded (and angry) – but American Airlines’ stock was flying (and their investors were no doubt happy).

While American Airlines’ stock has not been the top-performing airline stock this year, I believe it has the most potential. Its price-to-earnings ratio sits at 6.6x – way below its peers such as Delta Airlines (16.4x), United Airlines (8.9x), and Southwest Airlines (34.6x).

Plus, after two years of losses thanks to the pandemic, American Airlines has just returned to profitability – with its first-quarter earnings handily beating analysts’ estimates.

Some near-term challenges include the possibility of a recession. But a mild recession – should it arise – will likely only be a minor setback. 

In sum, American Airlines is an attractively-valued stock in a rapidly recovering industry – making it a stock every savvy investor should seriously consider.

To your wealth,
Felix @ Ace of Investing