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Here's Why Air Lease (AL) Stock Should Grace Your Portfolio

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Zacks Equity Research
·4 min read
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Shares of Air Lease Corporation AL have been displaying an uptrend despite the prevalent pandemic-triggered distress. The stock has rallied 32.8% in the past six months.

Let’s look into the factors that are working in favor of the stock.

Northbound Earnings Estimates: The Zacks Consensus Estimate for current-quarter earnings has been revised 9.8% upward over the past 90 days. For 2020, the consensus mark for the metric has moved 17% north in the same time frame. Such favorable estimate revisions reflect brokers’ confidence in the stock.

Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the same serves as a key indicator in determining the price of a stock.

Top Zacks Rank & Impressive Momentum Score: The stock has a Zacks Rank #1 (Strong Buy), currently, and a Momentum Score of A, which further highlights its short-term attractiveness. You can see the complete list of today’s Zacks #1 Rank stocks here.

Solid Industry Rank: The industry to which Air Lease belongs, currently has a Zacks Industry Rank of 68 (of 250 plus groups). Such a solid rank places the company in the top 27% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it hails from.

In fact, an ordinary stock within a strong group is likely to outshine a robust stock in a weak industry. Therefore, taking the industry’s performance into account becomes imperative.

Other Tailwinds: We are impressed by Air Lease’s endeavors to reward itsshareholders. In fact, the company has an impressive dividend payment history. In November 2019, its board approved a 15.4% hike in its quarterly cash dividend to 15 cents per share (annualized 60 cents). This raise marked the 7th dividend increase in the company’s dividend record. Moreover, Air Lease added shareholder value with dividends for 29 consecutive quarters. As investors prefer an income-generating stock, a high dividend-yielding one is much coveted. Needless to say that investors are always on the lookout for companies, which boast an impressive track of regular and incremental dividend payments.

We are also encouraged by the surge in revenues from rentals of flight equipment. Revenues from the segment rose 8.1% in first-half 2020 and led to a 10.2% jump in the top line. Despite the coronavirus-related setback, the segment’s performance in the first half deserves praise. Steady growth in Air Lease’s fleet is also appreciative. As of Jun 30, Air Lease owned 301 aircraft in the operating lease portfolio with a net book value of $19.1 billion. This compares favorably with 292 aircraft at the end of 2019 with a net book value of $18.7 billion. This fleet growth is aiding the company’s top line. 

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may also consider a few other top-ranked stocks like FedEx Corporation FDX, Atlas Air Worldwide Holdings AAWW   and Expeditors International of Washington EXPD. Both FedEx and Atlas Air sport the same Zacks Rank as Air Lease while Expeditors carries a Zacks Rank #2 (Buy) at present.

Shares of FedEx, Atlas Air and Expeditors have rallied more than 80%, 48% and 21%, respectively, in the past three months.

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FedEx Corporation (FDX) : Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
Air Lease Corporation (AL) : Free Stock Analysis Report
Atlas Air Worldwide Holdings (AAWW) : Free Stock Analysis Report
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