Despite the strong bull market, last year was a tough one for airline stocks like Spirit Airlines Incorporated (NYSE: SAVE ), as earnings were negatively impacted by rising fuel costs and competitive pressures. However, with the economy still going strong, consumers are wanting to travel more, and there are signs that industry conditions are bottoming out. And I think the best way to play that rising trend is through SAVE stock, since it is backed up by a no-frills airline that has been taking market share.
Spirit Airlines stock has been trading well since the company reported solid third-quarter results back in October, holding comfortably above its 50-day moving average, which has started to trend. It did take a couple of breathers, but got moving again after reporting strong November data in December.
Revenue passenger miles were up 17.3% and 13.9% year-to-date. In addition, management announced that CFO Ted Christie would become CEO in 2019, replacing Robert Fornaro, who took the job two years ago to fix difficult issues like on-time performance. I think SAVE's decision to change CEOs shows its confidence that the company is turning the corner.
The SAVE Stock Chart Tells a Positive Story
SAVE stock has met a critical level of resistance around $44, but after breaking through it on Dec. 21, it has been on a nice run. In fact, SAVE stock notched a series of new all-time highs along the way. While it has pulled back a bit on profit-taking recently, I don't think this stock's run is over just yet.
Management recently announced that they will make capacity additions in 2018 to allow the company to continue taking market share and enjoy another strong year. Its earnings should also benefit significantly from tax reform.
With a strong chart to support it and avenues for additional expansion, it's very likely we'll see Spirit Airlines stock fly to $48, if not beyond, sometime this year.
Hilary Kramer is the editor of GameChangers , Breakout Stocks , High Octane Trader , Absolute Capital Return and Value Authority . She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
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