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6 Reasons Why You Should Buy American Airlines (AAL) Now

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American Airlines Group Inc. (AAL - Free Report) is benefiting from continued recovery in air-travel demand. Driven by soaring demand for healthy bookings, management expects total unit revenues in the first quarter of 2023 to be roughly 24-27% higher than the level recorded in first-quarter 2022.

Against this backdrop, let’s look at the factors that make this stock an attractive pick.

What Makes American Airlines an Attractive Pick?

An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse over the past six months. Shares of American Airlines have gained 17.8% over the past six months, outperforming the 10.9% rise of the industry it belongs to.

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Solid Rank & VGM Score: American Airlines currently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions:The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 90 days, the Zacks Consensus Estimate for AAL’s 2023 earnings has moved up 39.6% year over year. For 2024, the company’s earnings are expected to increase 7.5% year over year. 

Earnings Expectations: Earnings growth and stock price gains often indicate a company’s prospects. For first-quarter 2023, American Airlines’ earnings are expected to register 100% growth. For 2023 and 2024, the company’s earnings are expected to grow 330% and 26.91% year over year, respectively.

Positive Earnings Surprise History: American Airlines has an impressive earnings surprise history. The company delivered an earnings surprise of 7.79% in the last four quarters, on average.

Growth Factors:Improved air-travel demand, particularly on the domestic front, is aiding American Airlines. Owing to upbeat air-travel demand, operating revenues in fourth-quarter 2022 increased 39.3% year over year.

Buoyant air-travel demand is also reflected by the total operating revenue increase of 16.6% from the fourth quarter of 2019 (pre-coronavirus) levels despite 6.1% lower capacity. Driven by soaring demand for healthy bookings, management expects total unit revenues in the first quarter of 2023 to be roughly 24-27% higher than the level recorded in first-quarter 2022.

Other Stocks to Consider

Some other top-ranked stocks from the broader Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Alaska Air Group, Inc. (ALK - Free Report) . Copa Holdings presently sports a Zacks Rank #1, while Alaska Air currently carries a Zacks Rank #2.

Copa Holdings has an expected earnings growth rate of 33.66% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.

The Zacks Consensus Estimate for CPA’s current-year earnings has improved 12.65% over the past 90 days. Shares of CPA have soared 7.2% over the past six months.

Alaska Air has an expected earnings growth rate of 32.64% for the current year. ALK delivered a trailing four-quarter earnings surprise of 8.98%, on average.

The Zacks Consensus Estimate for ALK’s current-year earnings has improved 11.4% over the past 90 days. Shares of ALK have soared 4.7% over the past six months.


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Copa Holdings, S.A. (CPA) - free report >>

American Airlines Group Inc. (AAL) - free report >>

Alaska Air Group, Inc. (ALK) - free report >>

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