This weekend marks the official kickoff of summer as we celebrate Memorial Day. For me, it means beers, burn outs and barbeques. Many Americans are traveling this weekend and if you're about to fly the friendly skies, show up early. It's a losing combination of exorbitant baggage fees and disgruntled employees making $15 an hour that's causing gut-wrenching, never ending labyrinths of lines at airports around the county. Take a look at the line at Midway Airport here in Chicago the other day
The frustrating part is, that's not even the busy airport in Chicago. In fact, it's the 24 th busiest airport in the country. At other airports, it's even worse. Things have gotten so bad that Homeland Security sent a request to the airlines asking them to temporarily waive their checked baggage fees. No kidding. People are cheap. Not as cheap as airlines. I mean, come on man, I can't even get roasted peanuts anymore. No wonder people are cramming four days-worth of underwear, socks and tank tops into their Nalgene water bottles. Fifty dollars for a checked bag I get to wait a half hour for after the flight lands? Not much of a value proposition.
Then there's the TSA workers. Woof. Have you ever been staring up at the ceiling tiles at the DMV wondering where they get those guys from? Well, if you're too slow for the DMV, you get a job at the TSA. Let that marinate. You can't fill out an application with blue ink. They give you a box of crayons and a stack of construction paper. Can you fog a mirror? Congrats, you're hired. Now go be the only line of defense between civilians and terrorism.
Now a major tailwind may be turning back to a headwind. The seasonal demand increase in crude has prices back over $50 a barrel. This rising fuel costs are not going to lead to the airline industry cutting revenue streams. So you can hope and pray for the industry to suspend baggage fees but it's not going to happen.
Still, the airline industry is in the Top 37% of our Zacks Industry Rank. People are flying and traveling because the economy is doing alright. Try to avoid stocks like Zacks Rank #5 (Strong Sell) Bristow Group (BRS) or Lufthansa (DLAKY). But there are two Zacks Rank #1 (Strong Buy) stocks, Air France and Skywest. Skywest may be the strongest stock in the industry right now as three analysts have increased their earnings estimates for the current year and next year. The bullish sentiment has pushed up our Zacks Consensus from$2.15 to $2.53 for the current year and up from $2.42 to $2.73 for next year.
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