In light of the U.S. government providing targeted financial relief from the coronavirus impact on Friday, several airline stocks, including those owned by Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), helped propel markets from their two-year lows.
According to the Aggregated Portfolio of Gurus, a Premium feature, four airline stocks with high guru ownership include Delta Air Lines Inc. (DAL, Financial), Alaska Air Group Inc. (ALK, Financial), Spirit Airlines Inc. (SAVE, Financial) and Southwest Airlines Co. (LUV, Financial).
U.S. government announces stimulus deal, targeting airlines like Berkshire’s Delta
House Speaker Nancy Pelosi said U.S. lawmakers and the While House were near a stimulus deal. Treasury Secretary Steven Mnuchin added that the airline industry is “among the priorities of the government.” Mnuchin also said airlines are facing a situation like was seen after Sept. 11, 2011.
On the heels of the stimulus deal, the Dow Jones Industrial Average closed at 23,185.62, up 1,985 points or 9.36% from Thursday’s close of 21,200.62. The 30-stock index recovered all but 367.60 points from Thursday’s monster drop, which sent the Dow close to the December 2018 lows.
As such, investors might seek opportunities in airline stocks broadly owned by our value investing gurus. For example, Delta, an airline that Buffett’s conglomerate raised its stake in earlier this month, has 19 gurus owning shares with a combined weight of 12.66% according to aggregated portfolio statistics.
GuruFocus ranks the Atlanta-based airline’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, expanding operating margins and a return on assets that is outperforming 83.93% of global competitors.
Delta’s valuation ranks 8 out of 10 on several signs of undervaluation, which include price-earnings and price-sales ratios near a five-year low and a price-book ratio near a 10-year low.
Other gurus with holdings in Delta include PRIMECAP Management (Trades, Portfolio), Pioneer Investments and the T Rowe Price Equity Income Fund (Trades, Portfolio).
Alaska
Fourteen gurus own shares of Alaska with a combined weight of 7.06%.
GuruFocus ranks the Seattle-based airline’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a three-star business predictability rank and a return on equity that outperforms 85.68% of global competitors.
Spirit
Twelve gurus own shares of Spirit with a combined weight of 5.13%.
GuruFocus ranks the Miramar, Florida-based airline’s profitability 8 out of 10 on several positive investing signs, which include a three-year revenue growth rate that outperforms 85.77% of global competitors and a return on equity that outperforms 81.89% of global airlines.
Southwest
Twelve gurus own shares of Southwest with a combined weight of 6%. As of December quarter-end, Berkshire owns 53,649,213 shares of the Dallas-based airline.
GuruFocus ranks Southwest’s profitability 8 out of 10 on the back of returns outperforming over 87% of global competitors.
Disclosure: Author is long Southwest.
Read more here:
- Warren Buffett’s Top Holdings Sink on Coronavirus Fears
- Value Screeners Seek Opportunities in Coronavirus-Driven Market
- Warren Buffett’s Market Indicator Falls From All-Time High
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