Investors who look to take advantage of sharp drops in the stocks of mature companies are having a hard time do so lately. As it turns out, when a stock like American Airlines' parent company AMR (AMR) tumble sharply it's usually because they deserve it. But what about those who compete with AMR or those positioned to benefit from the perpetually changing but always troubled nature of the airline industry? Breakout welcomed airline ax Ray Neidl from Maxim Group to help find some winners.
Ray offered two winning airlines and a couple companies in the business of buying planes and leasing them back to the cash-strapped big carriers:
Copa Holdings (CPA): A longtime Neidl favorite, Copa is a Panama based carrier serving most of Central America. They've "carved out a profitable little niche where they can grow," benefiting from an 8-10% organic growth rate in Panama.
Hawaiian (HA): Neidl likes this beaten down airway as a long-term play. He notes that bigger carriers have been pulling out of the Hawaiian market, leaving it to HA. Another factor is growth in China and South Korea as each nation adopts Japan's long-time affinity for the Aloha state.
Air Lease Corp. (AL): That's the name of the company as well as its industry. These guys benefit from the declining credit ratings of companies like AMR by taking ownership risk of the planes themselves then leasing them back to the airlines. With international banks increasingly taking a pass on the business, AL stands to gain as fleets are upgraded.
Aircastle (AYR): A dividend play with a 5.9% yield in a world where Treasuries get you nothing.
Obviously there isn't an economic tailwind working in your favor in anything airline related. Regardless, for the risk inclined, Neidl is sharp and has managed to give Breakout winning picks in a horrendous market. Check 'em out for yourself and let us know what you think in the comment section below.
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