8 airline stocks that could resist new COVID variant like Omicron: analyst – .

8 airline stocks that could resist new COVID variant like Omicron: analyst – .

Not all airline stocks are created equal in the current upside-down market environment.
Renewed volatility in the airline industry should be seen as the new normal in the near term as traders assess the risk of the new Omicron variant. But there are a few names in the troubled space to consider longer term buys if one is able to withstand wild swings in the short term.

Long-time airline analyst Helane Becker of Cowen said in a note to customers on Tuesday that she continued to have buy ratings on: United Airlines, Allegiant, Alaska Air, Frontier Airlines, JetBlue, Southwest Airlines, Spirit Airlines and Volaris.

Becker explained, “We think people will want to keep traveling, so while we may see a drop in bookings the first few days after Thanksgiving, we think we’ll start seeing an increase in bookings again. Over the past year, each new variant has resulted in a drop in bookings, but then an increase once the surge wears off. We expect the same pattern to emerge, although we didn’t expect each successive drop to be shorter than the last as people are starting to accept that we’ll have to learn to live with it indefinitely. “

A JetBlue Airways Airbus A320 with the registration N595JB taking off from Fort Lauderdale airport in the United States.

To be sure, it will take that aforementioned strong stomach to hold onto the airlines for now, as reopening stocks are being aggressively dumped across the board.

The Dow Jones Industrial Average picked up over 600 points in afternoon trading on Tuesday, while the Nasdaq Composite and S&P 500 were also deep in the red. All of Dow’s 30 components were in the red for the session, with the exception of Apple.

The Arca Airline Index – which tracks the stock performance of major airlines such as Delta Air Lines and JetBlue – is now down nearly 10% in the past five trading days.

The selling pressure is being felt among the major airlines. Delta and JetBlue shares are down 7.5% and 9% respectively over the past five sessions. United Airlines is down 12%.

Becker concedes that the demand picture for airlines will be mixed in the coming weeks due to the Omicron variant, which is why stocks are so weak right now.

“We expect travel to decline during the first two weeks of December and then increase from around mid-December to January 3, 2022. We will likely see another decline before increasing again in mid-December. February, with that increase likely back to 2019 levels. We expect year-over-year growth in 2022, particularly in international travel next summer, ”Becker adds.

Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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