Time to Pull the Chute on High-Flying Airline Stocks?

The process of flying has arguably never been more miserable but investing in airline stocks hasn't been this good in years. Delta (DAL) is leading the flock with a nearly 20% year-to-date move while smaller players Southwest (LUV), Alaska Air (ALK) and US Airways (LCC) trailing in the jet-stream.

Though shareholders of airline stocks have been abused since the inception of the industry, analysts like Savanthi Syth at Raymond James says these stocks have more room to fly. In the attached video Syth makes the case that investors go caught flatfooted when the worst-case economic scenarios for the last 6 months didn't occur. With airlines so levered to the economy a little good economic news goes a long way towards moving the stocks.

Part of what Syth likes about the group is exactly what makes flying so tortuous for business travelers. The companies have been shutting down unprofitable routes and "rationalizing capacity" -which is industry speak for making sure you're sharing the armrest every time you fly.

The headwinds for the run they've had already are fuel costs. The biggest single expense by far, makes a huge difference in their financial results. Delta actually has an entire refiner to help control the expense and Southwest is famous for its hedging program. None of which even addresses the challenges of rising energy prices on the economy as a whole.

She's a bull on the airlines but even Syth thinks it's time for a rest. Her favorite names on a pullback are Delta and Alaska Air, with US Airways and Southwest close behind. She's got the hot hand but if there's anything traders in airline stocks have learned over the years, it's to bring a good supply of airsickness bags.