3 reasons to buy JetBlue on the decline

The polar vortex might have grounded hundreds of JetBlue flights, but that's not enough to keep shares from taking off.

By Benzinga Jan 9, 2014 12:41PM

A JetBlue Airways Corp. plane in Long Beach, Calif. © Patrick T. Fallon/Bloomberg via Getty ImagesBy Jonathan Yates

 

Due to the terrible weather in the United States, JetBlue (JBLU) and other airlines have had to cancel many flights. JetBlue cancelled 300 flights on Monday, reducing operations at New York Kennedy, New York LaGuardia, Newark and Boston.

 

In a prepared statement, JetBlue advised that, "to ensure recovery of our operations as efficiently as possible and to be fully operable by tomorrow. This plan allows for 17 hours of rest for our equipment and crew members and time to service aircraft."

 

While the stock price of JetBlue declined due to this short-term situation, there are three reasons investors should expect it to take off again; and rise for the long term.

 

The first is that there is a bullish outlook for JetBlue due to the American Airlines merger with U.S. Airways. JetBlue along with Southwest Airlines is expected to pick up routes and landing slots. Many of these should be in the lucrative Northeast corridor. That is very bullish for the stock.

 

The next reason is a the macro outlook for the airline industry.

 

Air carriers have come back very strong from The Great Recession. The exchange-traded fund for the industry, Guggenheim Airline (FAA), is now around $43 a share.

 

Due to the impact of The Great Recession, it was under $24 in October 2012. It has risen about 20 percent over the last year of market action. The economy in the United States is improving, which is a very positive development for JetBlue and other airline companies. A recent article on Benzinga noted that JetBlue had "a strong domestic presence."

 

There is also momentum, as JetBlue is up more than 45 percent for the previous 52 weeks.

 

Momentum investors should be particularly bullish about JetBlue as it is up for the last week, month, quarter, six months, and year of trading. Volume has also been strong.

 

Due to the bull market and improving economic numbers from the United States, investors like JetBlue and other stocks do better when growth is rising. Guggenheim Airline has done well in recent market action, too. Buying should pick up again for JetBlue after this likely temporary dip.

 

JetBlue is now just under $8.70. The most recent recommendation for JetBlue was a buy on November 22, 2013 from CRT Capital with a target price of $12 a share.

 

Read more from Benzinga:

4Comments
Jan 9, 2014 1:21PM
avatar
I won't buy and you can't make me!
Jan 9, 2014 12:51PM
avatar
3 Reasons NOT to buy Jet Blue:

1) It's an airline stock
2) It's an AIRLINE stock
3) IT'S AN AIRLINE STOCK!!!!

Jan 9, 2014 3:28PM
avatar
  User and Brutus,  A short time ago I would have 100% agreed. It took many years for airlines to get out of their government subsidy mentality.  But they are doing so. There will be a airline to buy from time to time.
Jan 9, 2014 2:14PM
avatar

Only clueless people get suckered into buying any airline stock !

Never - Never - Never ! (Keep trying you paid Stock Pumpers ! - I'm sure some people don't read the comments!)

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125
125 rated 1
267
267 rated 2
455
455 rated 3
612
612 rated 4
682
682 rated 5
695
695 rated 6
632
632 rated 7
472
472 rated 8
279
279 rated 9
147
147 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
VZVERIZON COMMUNICATIONS9
TAT&T Inc9
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.