The airline industry hasn’t had the easiest run since the COVID-19 pandemic, but things are starting to look up in 2023.

The U.S. Global Jets ETF (ticker: JETS), an exchange-traded fund, or ETF, that tracks the airline industry, is up more than 1% year to date. Airline travel numbers are also nearly back to pre-pandemic levels, according to Transportation Security Administration data. People still need and want to fly, so while ongoing pandemic concerns, weather challenges and fuel prices present near-term headwinds, airline stocks can still thrive over the long term.

What’s more, stock analysts are coming out with clear favorites in the industry. If you’re willing to weather some near-term gusts for potential long-term gains, these are five of the best airline stocks to buy now based on analyst opinions:

  • Delta Air Lines Inc. (DAL)
  • Ryanair Holdings PLC (RYAAY)
  • Controladora Vuela Cia de Aviacion (VLRS)
  • Alaska Air Group Inc. (ALK)
  • Copa Holdings SA (CPA)

Delta Air Lines Inc. (DAL)

With all 21 analysts giving Delta a “buy” or “overweight” rating, it’s a natural choice to kick off this list of best airline stocks for 2023.

The advisory firm Institutional Shareholder Services, or ISS, reports that DAL is one of the most attractively priced stocks in relation to its true value in the airline industry. DAL’s return on equity of 25.2% is also the highest within the airline industry.

Morningstar Analyst Brian Bernard says Delta is the highest-quality legacy carrier because of its ability to attract high-yielding business travelers, and he expects it to return to pre-pandemic capacity in 2023.

Current earnings estimates for the stock have remained relatively stable, while average estimates within the industry declined 64%. Though 2022 operating revenue was 2% lower than 2019, CEO Ed Bastian expects 2023 revenue growth of 15% to 20%. Combined with lower unit costs, he said that should keep DAL on target for $5 to $6 earnings per share in 2023. Still, as with any airline stocks in 2023, prepare for a bumpy ride. DAL tends to rise higher, but also fall lower than the S&P 500.

Ryanair Holdings PLC (RYAAY)

Ryanair is Europe’s dominant low-cost carrier. Ryanair entered COVID-19 in good condition and made it through the pandemic without taking a crippling financial blow. Indeed, the airline has made solid gains over the past year, clocking nearly 6% gains since April 2022.

Ryanair had been gaining market share for years thanks to its incredibly cheap prices. The stock receives a “buy” or “overweight” rating from 95% of analysts.

Like DAL, ISS views RYAAY as among the most attractively priced airline stocks today. Analysts also cite its “exceptionally strong return on capital” and “outstanding” profit trend as reasons for the current buy rating.

Ryanair shares have more than doubled over the past decade, peaking at more than $120 per share in early 2018, which it nearly achieved again in 2021, making it one of the few long-term winners in the airline industry.

Alaska Air Group Inc. (ALK)

Alaska Air is a midsize carrier with its primary hub in Seattle. Shares were going for around $70 each prior to the pandemic, around $55 in summer 2021 and are now fetching about $42. This isn’t due to ALK having a particularly bad run of it during the pandemic; airlines such as American Airlines Group Inc. (AAL) had to take on more dilution and debt to survive.

However, the market is now apparently penalizing Alaska for its destinations. Alaska serves California and Hawaii extensively in addition to its namesake state. Markets such as Hawaii have been slower to recover due to heavy local COVID-19 restrictions. But there may be reason to hope for ALK.

The airline has historically had above-average management and well-run operations. Weakness in tourist markets such as Hawaii will pass, whereas ALK’s strong corporate culture should persist. Thirteen out of 15 analysts gives ALK a “buy” rating. Morgan Stanley’s latest report set a $71 price target for ALK, with expectations the stock will reach this within 12 months.

Controladora Vuela Cia de Aviacion (VLRS)

Mexico has been one of the best-performing aviation markets in the Americas. Traffic returned to 2019 levels or surpassed them outright at various Mexican airports within one year of the pandemic. Combine these facts, and it’s a great time to be a Mexican discount carrier. Controladora Vuela Cia de Aviacion, also known as Volaris, is Mexico’s largest and most successful of the bunch.

It got a big boost from the recent industry downturn as rival Interjet suspended operations. Mexico’s legacy carrier, Aeromexico, fell into bankruptcy reorganization as well. Add it all up, and Volaris is Mexico’s low-cost leader serving a burgeoning tourist market.

The majority of analysts covering the stock give it a “buy” rating, noting a positive earnings surprise in its February release of 14.3% above the consensus. It also has the highest gross margin at 85.3% within the airlines industry and above-average cash yield in each of the past five years.

Copa is another Latin American carrier that is set to thrive in a rapidly shifting landscape. Latin American governments provided far less aid to their airlines than the U.S. did during COVID-19. Thus, Aeromexico, Latam Airlines and Avianca all went into bankruptcy protection. All continue to fly, but being in bankruptcy certainly can hamper competitiveness. This opens a big opportunity for Panama’s Copa Airlines.

Panama is centrally located and thus Copa can add capacity in Mexico, Colombia, Peru and other markets where ailing airlines may need to pull back. Copa also enjoys high-margin flights in its Central American market, where there is minimal discount carrier competition.

Copa shares are hovering around $88, down sharply from their $110 pre-pandemic levels, but it’s been a relatively steady climb from the bottom of $31 in 2020. ISS analysts still report that CPA is among the most attractively priced airlines currently. They also highlight its strong return on capital and “outstanding” profit trend as reasons to buy.

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