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One of the most impressive people ever to walk the face of the earth is Jim Stokes and $$$MR. MARKET$$$ is honored to have met him and to call him a friend. Jim Stokes grew up in the suburb of Boston and first gained prominence at the University of Pennsylvania for his propensity for Friday night fights in Kings Court hallway or offsite at Doc Watsons. One of the most historic beatdowns occurred while he was toll chalking some Philly slime named Jimmy with wild round house rights until Stokes persuaded Jimmy’s friends to carry Jimmy away because it was like beating up his little brother.
Other admirable collegiate achievements included raising stray cats in the fraternity house, convincing a 110 lb fraternity pledge to wrestle Tuffy the Bear, and placing in the top 3 in the Wet Willie contest at Spring Break in Ft. Lauderdale. Then there was Clockwork Orange night…oh my brothers!
Despite this wide array of skill sets, young Jim Stokes could not forget the enjoyment and adrenaline rush he experienced from pummeling street urchins. Upon graduation, Jim Stokes decided to join the Air Force, where he learned to fly jets and drop big bombs on bad people.
The net result of this is that Jim Stokes became Captain Jim Stokes and is now flying commercial airliners for Delta. Any airline that is good enough for Captain Jim Stokes is certainly good enough for me.
Today I bought stock in Delta Airlines (DAL) at 29.11. I will sell it in 4 to 6 weeks at 33.52. Here’s why I like Delta:
First of all, look at this ridiculous chart:
It’s going up in a straight line because Delta made a billion dollars of profit in 2012 and already made 2 billion in profit through 3 quarters of 2013. They finally have this thing figured out and it ain’t stopping soon. Why do you think all these new airlines are looking to expand their route reach? It’s because running an efficient airline is profitable as all get out. Delta’s success isn’t even close to being reflected in their stock price. When was the last time you got on an airplane and the middle seat was empty? See what I am talking about? Delta’s PE of 12 means that this stock isn’t even close to reflecting the company’s recent successes.
Yes airline stocks have done extremely well in the last few years, but there is good reason for that. Having said that, these stocks are still undervalued compared to the rest of the market in regards to PE valuation. PE expansion alone, is going to be a strong enough force to move the stock price of Delta higher and higher. The S&P 500 PE ratio is at 20. That means Delta has at least 50% more run in its stock price, assuming flat earnings, to get to where the average market is.
The price to free cash flow, or P/FCF, of Delta Airlines is 19, lower than the industry's P/FCF of 28. Delta’s PEG ratio is 0.53, also lower than the industry's PEG ratio of 0.88. Both of these key valuation parameters indicate that DAL is currently undervalued.
This ain’t your Daddy’s airline industry. Have you caught wind of all of the mergers lately? United/Continental and US Air/American. There ain’t any big boys left to do price wars. The competitive environment has fundamentally changed and these companies are not going to unmerge. It is Adam Smith talking…supply and demand. Total domestic seat capacity is down 12% over the last 7 years. Supply goes down, prices go up. Prices go up. Profits go up. Profits go up. Earnings go up. Earnings go up. Stock price goes up.
The market for extra capacity has dried up. You can’t just start a new airline that can saturate the market overnight. You can’t snap your fingers and get new planes and labor to build an airline that can put a dent in what the big boys have right now.
Now here’s why I think Delta will lead the bunch going forward. In the third quarter of fiscal year 2013, Delta’s available seat miles, or ASM, increased about 3% year over yea. Delta ordered 40 new Airbus jets for around $6 billion. You don’t increase your capacity like that unless you are sure you can put fannies in seats. These guys didn’t fall off the turnip truck last night. They’ve been around the block and have seen what can happen to the industry when planse fly empty. Their planning software and logistics are way better than they were when airlines were killing each other. These guys can now fly efficiently with full planes.
Besides this, Delta Airlines also plans to increase its passengers' revenue from the international passengers. To gain traction with international passengers', Delta Airlines is expected to start providing in flight Wi-Fi services on international flights by the end of this year. Don’t you love using the internet on an airplane? You can get $$$MR. MARKET$$$ picks at 30,000 feet!
Corporate travel managers rated Delta Air Lines No. 1 in this year's Business Travel News Annual Airline Survey for the third year in a row. The airline ranked first among all carriers in nine of 10 categories scoring particularly high in key areas of the survey including: Value of Relationships with Account Managers and Sales Representatives; Quality of Airline Communications; and Networks, Airline Partnerships and Frequencies. Delta Air Lines carried the most systemwide passengers among U.S. airlines in August. All of this bodes well for future revenues.
The last time Captain Jim Stokes flew into NJ to visit $$$MR. MARKET$$$, he burned extra fuel so that the flight would get in a half hour sooner. He also brought me a Lost in Space robot.
It’s awesome!
Delta Air Lines will increase service at Boston's Logan International Airport with daily year-round and seasonal service to the following seven destinations, including three new markets. Maybe that’s just Captain Stokes going back to his old stomping ground at the Porter House Pub in Cambridge. The beers aren’t 10 cents there anymore, but I’m sure with the profit I make on my Delta stock, drinks will be on $$$MR. MARKET$$$ for all of my new friends at the bar!
I am HUGE!!
$$$MR. MARKET$$$
$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.
Other admirable collegiate achievements included raising stray cats in the fraternity house, convincing a 110 lb fraternity pledge to wrestle Tuffy the Bear, and placing in the top 3 in the Wet Willie contest at Spring Break in Ft. Lauderdale. Then there was Clockwork Orange night…oh my brothers!
Despite this wide array of skill sets, young Jim Stokes could not forget the enjoyment and adrenaline rush he experienced from pummeling street urchins. Upon graduation, Jim Stokes decided to join the Air Force, where he learned to fly jets and drop big bombs on bad people.
The net result of this is that Jim Stokes became Captain Jim Stokes and is now flying commercial airliners for Delta. Any airline that is good enough for Captain Jim Stokes is certainly good enough for me.
Today I bought stock in Delta Airlines (DAL) at 29.11. I will sell it in 4 to 6 weeks at 33.52. Here’s why I like Delta:
First of all, look at this ridiculous chart:
It’s going up in a straight line because Delta made a billion dollars of profit in 2012 and already made 2 billion in profit through 3 quarters of 2013. They finally have this thing figured out and it ain’t stopping soon. Why do you think all these new airlines are looking to expand their route reach? It’s because running an efficient airline is profitable as all get out. Delta’s success isn’t even close to being reflected in their stock price. When was the last time you got on an airplane and the middle seat was empty? See what I am talking about? Delta’s PE of 12 means that this stock isn’t even close to reflecting the company’s recent successes.
Yes airline stocks have done extremely well in the last few years, but there is good reason for that. Having said that, these stocks are still undervalued compared to the rest of the market in regards to PE valuation. PE expansion alone, is going to be a strong enough force to move the stock price of Delta higher and higher. The S&P 500 PE ratio is at 20. That means Delta has at least 50% more run in its stock price, assuming flat earnings, to get to where the average market is.
The price to free cash flow, or P/FCF, of Delta Airlines is 19, lower than the industry's P/FCF of 28. Delta’s PEG ratio is 0.53, also lower than the industry's PEG ratio of 0.88. Both of these key valuation parameters indicate that DAL is currently undervalued.
This ain’t your Daddy’s airline industry. Have you caught wind of all of the mergers lately? United/Continental and US Air/American. There ain’t any big boys left to do price wars. The competitive environment has fundamentally changed and these companies are not going to unmerge. It is Adam Smith talking…supply and demand. Total domestic seat capacity is down 12% over the last 7 years. Supply goes down, prices go up. Prices go up. Profits go up. Profits go up. Earnings go up. Earnings go up. Stock price goes up.
The market for extra capacity has dried up. You can’t just start a new airline that can saturate the market overnight. You can’t snap your fingers and get new planes and labor to build an airline that can put a dent in what the big boys have right now.
Now here’s why I think Delta will lead the bunch going forward. In the third quarter of fiscal year 2013, Delta’s available seat miles, or ASM, increased about 3% year over yea. Delta ordered 40 new Airbus jets for around $6 billion. You don’t increase your capacity like that unless you are sure you can put fannies in seats. These guys didn’t fall off the turnip truck last night. They’ve been around the block and have seen what can happen to the industry when planse fly empty. Their planning software and logistics are way better than they were when airlines were killing each other. These guys can now fly efficiently with full planes.
Besides this, Delta Airlines also plans to increase its passengers' revenue from the international passengers. To gain traction with international passengers', Delta Airlines is expected to start providing in flight Wi-Fi services on international flights by the end of this year. Don’t you love using the internet on an airplane? You can get $$$MR. MARKET$$$ picks at 30,000 feet!
Corporate travel managers rated Delta Air Lines No. 1 in this year's Business Travel News Annual Airline Survey for the third year in a row. The airline ranked first among all carriers in nine of 10 categories scoring particularly high in key areas of the survey including: Value of Relationships with Account Managers and Sales Representatives; Quality of Airline Communications; and Networks, Airline Partnerships and Frequencies. Delta Air Lines carried the most systemwide passengers among U.S. airlines in August. All of this bodes well for future revenues.
The last time Captain Jim Stokes flew into NJ to visit $$$MR. MARKET$$$, he burned extra fuel so that the flight would get in a half hour sooner. He also brought me a Lost in Space robot.
It’s awesome!
Delta Air Lines will increase service at Boston's Logan International Airport with daily year-round and seasonal service to the following seven destinations, including three new markets. Maybe that’s just Captain Stokes going back to his old stomping ground at the Porter House Pub in Cambridge. The beers aren’t 10 cents there anymore, but I’m sure with the profit I make on my Delta stock, drinks will be on $$$MR. MARKET$$$ for all of my new friends at the bar!
I am HUGE!!
$$$MR. MARKET$$$
$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.
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