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Are Airline Stocks a Good Investment Right Now? I LEARN HOW TO INVEST STEP BY STEP - YouTube
Channel: The Investors Game
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are you wondering why you don't invest in airlines聽
stock if they are too cheap well let me tell you聽聽
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that president trump in october council talks聽
for a second round of stimulus aid to the聽聽
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academy however he said long market should pass聽
another 25 billion of dollars in aid for airlines聽聽
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airlines have cut flights package jets borrow聽
money tied billions in government aid to聽聽
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weathering historic crisis for the industry聽
executives and analysts say that the industry聽聽
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recovery is likely at least three years away hi聽
there welcome to investors game today we're gonna聽聽
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talk about should you buy airlines in stock now聽
and give us a thumbs up you know that helped us聽聽
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a lot so let's get started now it know might be a聽
great idea to be invested in the airline industry聽聽
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companies like united airlines have been hit hard聽
by the coronavirus pandemic minor airlines burn聽聽
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through millions of dollars in cash raised debt聽
and equity to finance non-profitable operations聽聽
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and failed to get the funding they needed for聽
the federal government but despite these setbacks聽聽
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airlines have been still managed to pay their聽
leases and met their debt obligations on time聽聽
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as airlines fought to compete for the little聽
business out there over the last few months聽聽
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flight travel is also starting to pick up as cases聽
decline but airlines still face a lot of uncertain聽聽
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on the speed of recovery process and the amount聽
of time it will take to recover profit margins聽聽
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this hasn't stopped industry analysts from聽
speculating on the best stock to buy when travel聽聽
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sector comes back to life some stocks provide a聽
great buying opportunity while prices are still聽聽
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low but what airlines stock are the most common聽
well let me tell you that delta american airlines聽聽
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united and southwest control roughly聽
80 percent of the us airline business聽聽
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even though they control the 80 percent of the聽
market they have different types of costs in the聽聽
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u.s there are three types of airlines they are the聽
big networks carriers delta american and united聽聽
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there are low cost careers like southwest and聽
jetblue then there are the ultra low cost careers聽聽
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like spirit airlines theoretically the airlines聽
and arguably all businesses should put emphasis on聽聽
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maintaining enough cash to make it through less聽
than profitable period like the one we are now聽聽
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one thing to pay attention is that due to copy 18聽
a lot of airpods have been closed some people are聽聽
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scared to travel and all of these factors are聽
affecting the airline's earnings and to recover聽聽
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all the losses it will take at least three years聽
and if airpods keep being closed this will delay聽聽
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even more the economy too airlines stock聽
is not as volatile as other stocks as well聽聽
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now let's take a look at what sets these stocks聽
from the others names that are struggling within聽聽
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the airline industry first delta like many of聽
its peers the coronavirus pandemic dealt a hard聽聽
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blow to delta airlines the price of delta stock聽
is down nearly 55 since the start of the year聽聽
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and it's currently trading at just 33 dollars per聽
share but despite oblique industry outlook the聽聽
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company fundamentals remain secure delta earnings聽
took a hit as revenue declined from 47 billions in聽聽
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2018 to just 1.2 billions of dollars in the past聽
quarter that was a big hit but the company did聽聽
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everything in its power to improve its liquidity聽
position the airline decreased the daily cash聽聽
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burn rate from 100 million of dollars per day聽
in march to just 27 million of dollars per day聽聽
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in june it also entered a credit facility for聽
3 billion of dollars in march and in once again聽聽
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for 6.5 billions of dollars later in the year the聽
company's abilities to rise debt to equity despite聽聽
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facing incriminating losses is a statement to聽
the durability of delta analysts also remain聽聽
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optimistic about the future of the company and聽
the analyst daniel mckenzie expects that the聽聽
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airline stocks to trade at 50 into 222 with聽
earnings per share of six dollars remember聽聽
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this is only speculation given delta's size and聽
strong liquidity position it is likely that the聽聽
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company will be able to weather the kavin 19 storm聽
and emerge froden crisis is stronger than ever聽聽
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second southwest in terms of reputation southwest聽
airlines hold the top position among its peers聽聽
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in the u.s however this doesn't mean that the聽
company was immune to the effect of the kovi 19.聽聽
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it is second quarter the airlines reported聽
a loss of 2.67 dollars per share and had聽聽
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an estimated cash burn rate of 23 billions聽
of dollars which is major cash for concern聽聽
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however this number has improved since then and聽
southwest now expect a cash burn rate of just聽聽
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17 million dollars per day this improvement was聽
attributable to increase in air travel and the聽聽
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decrease in spending over the last few months聽
the airline's revenue efficiency has put the聽聽
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company in a great position against its u.s聽
peers in addition to its strong fundamentals聽聽
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southwest also has the ability to bounce back聽
from the pandemic due to its loyal customer base聽聽
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despite the increase in air travel southwest has聽
promised that it will only book two-thirds of the聽聽
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flight's capacity until october to abide by social聽
distances rules this is an effort to prioritize聽聽
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customer safety even if it means revenue has to聽
take the back seat although southwest has the聽聽
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drawbacks the company's relatively strong balance聽
sheet and loyal customer base could put this聽聽
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airline stock back on track when travel rebounds聽
also it will be a solid stock to pick up while聽聽
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prices remain low next alaska airlines apparently聽
controls 50 percent of the markets in seattle聽聽
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one of the alaska airlines key advantage is聽
its dominant position is in pacific northwest聽聽
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their airlines is worth nothing that companies聽
like amazon and starbucks are headquartered in聽聽
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this region this means that when it's safe to聽
travel again corporate travel in the region will聽聽
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see a major uptick while there's no denying the聽
power that the big fire airlines in the us hold聽聽
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it also worth looking at the smaller聽
airlines stock as travel makes a comeback聽聽
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alaska airlines is a company that always flows聽
under the radar but is it strong fundamentals聽聽
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made this airlines stock a winner in a volatile聽
industry another growth driver for alaska airlines聽聽
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is its recent partnership with american airlines聽
which includes the exchange of flights and millage聽聽
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rewards this is expected to increase revenue in聽
the coming months alaska is also expected to join聽聽
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the one world alliance at the end of 2020 and the聽
company can leverage revenue for the key hubs to聽聽
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accelerate its path to recovery now let's take聽
a look at the chart of each one of these stocks聽聽
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all right here we got delta stock and we're gonna聽
use a wiki candle so we can have a better picture聽聽
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of what's going on in the market and we're gonna聽
use the method to plan demand so we can identify聽聽
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the market is over value it's undervalued you will聽
remember every market comes with the plan demand聽聽
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and i want to clear one thing that people do is a聽
big mistake is that they look at the highest price聽聽
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that we can see right here and the current price聽
and then they base their returns on the difference聽聽
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between the highest price and the current price聽
this is a common mistake because we can measure聽聽
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the returns like that we have to see the balance聽
sheet if the company is going up if the cash flow聽聽
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that they have is really good and so much other聽
things because the company can go bankruptcy聽聽
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and will never reach this price for that reason聽
just keep it simple and please don't do that so聽聽
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what we're gonna do is just a pre-analysis and聽
identify if we can buy this or sell this stock聽聽
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now we're gonna see the lowest price because it's聽
interest in this sound this one is where the smart聽聽
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investors invest their money so if the market聽
comes down at this price it will be a good option聽聽
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to buy at this point so for example this stock聽
is really good option to buy if the price goes聽聽
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at least at 72 dollars per share or the lowest聽
price that i will buy this it will be a 17 dollars聽聽
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per share that would be really weird to happen聽
but remember this is only for long-term returns聽聽
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this is those long-term returns so what happened聽
with people that just want to short-term returns聽聽
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so we can see this on that it's over here聽
and the price tried to go even more up聽聽
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but the price will never reach the sun why because聽
we got a supply and zone that is affecting this聽聽
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price this is a demand zone this is our supply聽
sign also we can see some that we got a triangle聽聽
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right here and we can see and what's happening in聽
this chart well because the market is in triangle聽聽
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we can't move and we can't buy or sell this聽
stuff right now because it's not clear that's聽聽
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that's nothing for me if i would have a thousand聽
dollars to invest in airlines stock i would invest聽聽
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right now because it's not attractive price for聽
me it's 33 dollars is overpriced because this聽聽
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this means that the price is expensive so i would聽
like to invest or buy this stock at this point聽聽
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and i would like to sell for short-term returns聽
at this this price just for short-term returns聽聽
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remember we have to focus just in long-term聽
returns because that's the key in investing聽聽
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we can expect be profitable investing in short聽
term because that's not a point all right the聽聽
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next stock that we're going to check is going to聽
be southwest airlines and we're going to check聽聽
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a same a weekly candle so we have a better picture聽
and here is something interesting that we're gonna聽聽
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send the same thing we're gonna mark the lowest聽
price and the highest price so first we can see聽聽
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that the lowest it was at 22 until 26 dollars聽
per share so this is a really good price and we聽聽
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have a trend like saying that the market is聽
going up now that we got a trend we can see聽聽
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that also we have a demand sum right here that is聽
affecting the market so this one is really really聽聽
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interesting we can see that the market already hit聽
one two and three times so it's probably that the聽聽
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market could even go up and then down until this聽
sound that is really really really good to buy
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and then go even more up so maybe the best option聽
will be to buy in the middle because we see that聽聽
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the market already has a trend so the best option聽
is to follow the trend don't go against the train聽聽
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so in the middle always is a good option to buy聽
because if the market already has a trend already聽聽
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has orientation so the price it doesn't seem to聽
be really expensive in the middle because the聽聽
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company has a good balance sheet has a good cash聽
flow and the company looks like half futures plan聽聽
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to be a long term so if i will buy to the stock it聽
will be just in the middle or even lower but now聽聽
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at this point because it's not attractive price聽
for me if you like this video don't forget to聽聽
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hit the like button let me know in the comment box聽
would you invest in any of these analyzing stocks聽聽
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in youtube with new content and do not forget聽聽
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