As investors cheer on positive news of a coronavirus vaccine, four airport services and airline stocks that have high profitability, good five-year revenue growth and are modestly undervalued based on the GF Value are Spirit Airlines Inc. SAVE, Fraport AG XTER:FRA, Atlas Air Worldwide Holdings Inc. AAWW and Malaysia Airports Holdings Bhd XKLS:5014 according to the All-in-One Screener, a Premium feature of GuruFocus.
Markets surge on vaccine hopes, airline stocks stage liftoff
The Dow Jones Industrial Average rocketed to a new record intraday high of 29,933.83, up over 1,600 points from last Friday's close of 28,323.40 on Pfizer Inc. PFE and BioNTech SE's BNTX announcement that its Covid-19 candidate vaccine prevented, with an over 90% effective rate, the virus in trial participants.
Stocks of major U.S. airline companies like American Airlines Inc. AAL, United Airlines Holdings Inc. (UAL), Delta Air Lines Inc. (DAL) and Southwest Airlines Co. LUV soared over 10% on the vaccine news.
As such, investors may find opportunities in the stocks of airport service and airline companies that have a GuruFocus profitability rank of at least 7, a five-year revenue growth rate of at least 5% and are modestly undervalued based on the GF Valuation measure. GuruFocus' own valuation method considers a company's historical price multiples and adds internal adjustments based on a company's past performance and future earnings growth.
Spirit
Shares of Spirit traded around $21.51, showing that the stock is modestly undervalued with a price-to-GF Value ratio of 0.87.
GuruFocus ranks Spirit's profitability 8 out of 10 on the back of three-year revenue growth rates near a 10-year high of 19.3% and outperforming 87.34% of global competitors.
Gurus with large holdings in Spirit include PRIMECAP Management (Trades, Portfolio) and Hotchkis & Wiley.
Fraport
Shares of Fraport traded around 41.37 euros ($48.88), showing that the stock is modestly undervalued with a price-to-GF Value ratio of 0.80.
The German airport services company operates aviation, retail, real estate, ground handling and international services at Frankfurt Airport. GuruFocus ranks the company's profitability 7 out of 10, driven by a three-year revenue growth rate that is near a 10-year high of 12.70% and outperforms 76.54% of global competitors.
Atlas Air Worldwide
Shares of Atlas Air Worldwide traded around $52.69, showing that the stock is modestly undervalued with a price-to-GF Value ratio of 0.86.
The Purchase, New York-based company provides outsourced aircraft and aviation operating services. GuruFocus ranks the company's profitability 7 out of 10 on the back of operating margins and three-year revenue growth rates outperforming over 70% of global competitors.
Gurus with large holdings in Atlas Air Worldwide include David Einhorn (Trades, Portfolio)'s Greenlight Capital Re Ltd. GLRE and Donald Smith & Co.
Malaysia Airports Holdings
Shares of Malaysia Airports Holdings traded around 4.33 Malaysian ringgit ($1.05), showing that the stock is modestly undervalued with a price-to-GF Value ratio of 0.83.
Malaysia Airports operates and manages airports primarily in Southeast Asia. GuruFocus ranks the company's profitability 8 out of 10 on several positive investing signs, which include expanding operating margins, a 3.5-star business predictability rank and three-year revenue and earnings growth rates that outperform over 77% of global competitors.
Disclosure: Long Southwest Airlines.
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