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Although $$$MR. MARKET$$$ is the best stock picker on the planet, he still hasn’t quit his day job yet. This year, I’ve been doing a lot of traveling in and out of Houston. Although I always fly on United, I am really thankful that Southwest Airlines flies out of Houston also. In fact, Southwest basically has their own airport in Houston (Hobby). Everyone knows that Southwest offers discounted airfares . $$$MR. MARKET$$$ doesn’t like wasting monies on airfare when he can be using this cash to buy more stocks. So why does any of this matter if I don’t fly on Southwest? Where am I going with this? It’s really very simple. As long as Southwest is in Houston, United won’t be able to charge ridiculously high airfares because they’ll lose all of their business. So I get to use the United Club, fly in Premium Plus seating and I don’t have to pay that much more for my plane ticket. That makes me happy.
Meanwhile Southwest Airlines has been doing very well. So well that I figured it would make sense to buy their stock.
Today I bought stock in Southwest Airlines (LUV) at $24.76. I will sell it in 4 to 6 weeks at 28.55. Here’s why I love LUV:
First of all, look at the amazing chart:
LUV stock is up 76% over the last 12 months yet its PE is only 20. Why is the stock going up and the PE so cheap? Because Southwest makes money…gobs of it. Why do they make money?
Just ask the customer:
“Great prices, friendly staff- I think Southwest Airlines will be my "go to airline" whenever I need cheap tickets to any destination.
I recently got a credit card for my travel needs, and the Chase Southwest Airlines credit card is a good way to go if you are looking to acquire miles quickly for Southwest. After spending $2000, you get enough miles for four trips-- which is highly recommended because this airline is good.
Tips for your Southwest Airlines travels:
- Download their iPhone app. It will help you check in 24 hours ahead of schedule, guaranteeing you will get the best seat in your opinion on the plane.
- If your phone is low, remember your charger because they have a lot of outlets for phone recharging when you are low on battery.
- The best seats are in the front of the plane, since they have the most space.
- You can check in two bags free (which is awesome for a discount airline).
- Study up on your Trivial Pursuit trivia because sometimes they reward you with free drink coupons for those who can answer trivia. They definitely try to make the environment festive. FYI: The first movie Johnny Depp starred in was 'Nightmare on Elm Street'.
- They serve snacks!”
And there are oodles of industry awards:
· Named to FORTUNE's 2014 list of World's Most Admired Companies for the 20th consecutive year and notably, the only commercial airline to rank in the Top Ten
· Received the top recognition for best customer experience in the airline industry, according to the 2014 Temkin Experience Ratings
· Received the Diamond Award by Air Cargo World with high marks for great Customer Service, Performance, Value, and use of Information Technology
· Named Domestic Carrier of the Year by the Airforwarders Association for the fifth consecutive year
· Named Domestic Airline of the Year by Express Delivery & Logistics Association for the 14th consecutive year
· Named to the BetterInvesting Top 200 companies
Over the years, Southwest has patiently applied its low cost, no frills model to generate profits quarter after quarter. In another sign of its profitability, Southwest Airlines (LUV) is sending more cash to shareholders with a 50 percent bigger dividend and plans to repurchase $1 billion more of its stock. Southwest will pay 6¢ per share, up from 4¢, and said its prior $1.5 billion buyback program had ended recently. LUV repurchased $540 million in stock in 2013. It has paid a dividend since 1976.
In line with current trends, the airline expects unit revenues to grow in the future, and this will lead of course to further share price gains. The company is on the right path as far as its strategies of improving efficiencies in operation, introducing various customer-friendly programs, optimization of network, and capacity management are concerned.
Southwest picked up a lot of New York and Washington DC business when federal regulators mandated, as part of its approval of American’s (AAL) merger with US Airways, that they had to divest some of these airport slots. This was a big pickup for Southwest. This gives the airline more exposure to two airports with many high-paying corporate travelers. What’s funny is that Southwest is not always the cheapest airline. That means they make even more money when they can get these prices to stick. Southwest has grown to 3,600 daily flights since its first flight in June 1971, when its fleet numbered three Boeing 737s shuttling travelers among Dallas, Houston, and San Antonio.
Southwest is building a new international terminal at Houston’s Hobby Airport to allow it to fly to Mexico, the Caribbean, and Latin America. Southwest is really amping up its expansion plans for 2015. It will be a HUGE jump in revenues! The company truly believes that it has more opportunities than they have airplanes over the next five years. With the acquisition of AirTran, Southwest has jumped into international operations which typically has much higher margins and less competition than the domestic routes.
Of course a rising tide lifts all boats. Around 210 million passengers, nearly 2.28 million per day, are expected to fly on U.S. carriers between June 1 and Aug. 31. That's up 1.5% from last summer and the highest since 2008. The first three months of the year are traditionally the hardest for airlines, as traffic slows from the busy holiday quarter. Airlines typically raise their ticket fees slightly during the peak summer travel season
If you track LUV’s performance over the last few years, it’s obvious that they will ride this trend for more earnings:
Revenue Earnings
2013 17,699 1.05
2012 17,088 0.56
2011 15,658 0.23
As we’ve seen in the other airline winners that $$$MR. MARKET$$$ has recently invested in (DAL and SAVE), the airline industry has turned itself around and has strong fundamentals going forward. There's great potential for future growth through the impact of acquisitions, expansion into additional markets, and growth in passenger fees. Southwest has differentiated itself by having a quality management team in place and generating an unbeatable string of consecutive years of profitability. The trend is indeed your friend. Southwest has shown a proven track record at earnings season. The stock has only missed once in the past two years, so it should have no trouble smashing the ANAL-ysts estimates of $1.50/share in 2014.
After another great earnings beat last month, this is what their boss had to say:
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, "I am delighted to report record first quarter earnings, which increased significantly year-over-year, despite the disruption caused by more than 7,500 of our flights canceled due to extreme weather conditions and the impact of the shift in timing of the Easter and Passover holidays. This outstanding performance was driven by record first quarter operating revenues of $4.2 billion, and a 1.2 percent year-over-year decline in total operating costs, excluding special items, driven largely by lower fuel prices and our ongoing fleet modernization. Our record first quarter operating income of $242 million, excluding special items, was very strong, especially considering an estimated $50 million unfavorable impact from winter storms. Operationally, our Employees did an outstanding job in difficult conditions taking care of our Customers, and I thank them again for their efforts.
"Our first quarter 2014 earnings performance is a superb start to the year and on plan to achieve a 15 percent pre-tax return on invested capital for the year, excluding special items. Second quarter 2014, benefiting from the Easter and Passover holidays, also is off to a great start, with strong bookings, favorable revenue trends, and stable fuel prices.
"Our balance sheet, liquidity, and cash flows remain strong. We are actively managing our debt and total invested capital, while making strategic investments that have already contributed significantly to our record profitability. We were pleased to return $371 million to Shareholders during first quarter 2014 through the payment of $56 million in dividends and the repurchase of $315 million in common stock. Since August 2011, we have returned $1.6 billion to our Shareholders through share repurchases and dividend payments.
"Our five strategic initiatives are on track and meeting or exceeding expectations. In January, we deployed our international reservation system and began selling Southwest's inaugural international service to Aruba, The Bahamas, and Jamaica, scheduled to begin July 1, 2014. We quickly followed with selling Southwest service to Cancun and Los Cabos, scheduled to begin August 10, 2014. By the end of this year, we intend to fully convert AirTran's seven international markets, along with its remaining domestic markets, to the Southwest route network. We have converted 21 of the 52 AirTran Boeing 737-700s to the Southwest Evolve configuration, and plan to convert the remaining 31 -700s this year. This will complete the AirTran integration and retire the brand by the end of 2014.
"We have a significant amount of fleet activity planned this year, as we wind down the AirTran brand and continue to modernize our fleet, resulting in a larger than normal number of aircraft out of scheduled service. Accordingly, we expect relatively flat 2014 available seat miles, year-over-year.
"Our network development and optimization results, to date, have been excellent. We are excited about the opportunity to add new service to New York LaGuardia, Washington Reagan National, and Dallas Love Field this year, as well as to the international terminal under construction at Houston Hobby next year. Looking ahead to 2015, while we have not finalized our fleet and capacity plans, we have been managing to a baseline of 695 aircraft, which was our combined fleet at the time of the AirTran acquisition. We are planning year-over-year growth in our available seat miles derived from increased fleet utilization resulting from the completion of the AirTran integration and the increase in seats from the upgauging of our fleet. Of course, this will drive significant unit cost benefits."
“After the rough decade that Southwest Airlines and its shareholders have endured, today is definitely a cause for celebration.”
The was rather long winded but you can’t blame this guy for bragging. I’ll be celebrating within the next couple of months when I book this profitable trade. Then I’ll fly first class on my next trip to Houston Nutt.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Meanwhile Southwest Airlines has been doing very well. So well that I figured it would make sense to buy their stock.
Today I bought stock in Southwest Airlines (LUV) at $24.76. I will sell it in 4 to 6 weeks at 28.55. Here’s why I love LUV:
First of all, look at the amazing chart:
LUV stock is up 76% over the last 12 months yet its PE is only 20. Why is the stock going up and the PE so cheap? Because Southwest makes money…gobs of it. Why do they make money?
Just ask the customer:
“Great prices, friendly staff- I think Southwest Airlines will be my "go to airline" whenever I need cheap tickets to any destination.
I recently got a credit card for my travel needs, and the Chase Southwest Airlines credit card is a good way to go if you are looking to acquire miles quickly for Southwest. After spending $2000, you get enough miles for four trips-- which is highly recommended because this airline is good.
Tips for your Southwest Airlines travels:
- Download their iPhone app. It will help you check in 24 hours ahead of schedule, guaranteeing you will get the best seat in your opinion on the plane.
- If your phone is low, remember your charger because they have a lot of outlets for phone recharging when you are low on battery.
- The best seats are in the front of the plane, since they have the most space.
- You can check in two bags free (which is awesome for a discount airline).
- Study up on your Trivial Pursuit trivia because sometimes they reward you with free drink coupons for those who can answer trivia. They definitely try to make the environment festive. FYI: The first movie Johnny Depp starred in was 'Nightmare on Elm Street'.
- They serve snacks!”
And there are oodles of industry awards:
· Named to FORTUNE's 2014 list of World's Most Admired Companies for the 20th consecutive year and notably, the only commercial airline to rank in the Top Ten
· Received the top recognition for best customer experience in the airline industry, according to the 2014 Temkin Experience Ratings
· Received the Diamond Award by Air Cargo World with high marks for great Customer Service, Performance, Value, and use of Information Technology
· Named Domestic Carrier of the Year by the Airforwarders Association for the fifth consecutive year
· Named Domestic Airline of the Year by Express Delivery & Logistics Association for the 14th consecutive year
· Named to the BetterInvesting Top 200 companies
Over the years, Southwest has patiently applied its low cost, no frills model to generate profits quarter after quarter. In another sign of its profitability, Southwest Airlines (LUV) is sending more cash to shareholders with a 50 percent bigger dividend and plans to repurchase $1 billion more of its stock. Southwest will pay 6¢ per share, up from 4¢, and said its prior $1.5 billion buyback program had ended recently. LUV repurchased $540 million in stock in 2013. It has paid a dividend since 1976.
In line with current trends, the airline expects unit revenues to grow in the future, and this will lead of course to further share price gains. The company is on the right path as far as its strategies of improving efficiencies in operation, introducing various customer-friendly programs, optimization of network, and capacity management are concerned.
Southwest picked up a lot of New York and Washington DC business when federal regulators mandated, as part of its approval of American’s (AAL) merger with US Airways, that they had to divest some of these airport slots. This was a big pickup for Southwest. This gives the airline more exposure to two airports with many high-paying corporate travelers. What’s funny is that Southwest is not always the cheapest airline. That means they make even more money when they can get these prices to stick. Southwest has grown to 3,600 daily flights since its first flight in June 1971, when its fleet numbered three Boeing 737s shuttling travelers among Dallas, Houston, and San Antonio.
Southwest is building a new international terminal at Houston’s Hobby Airport to allow it to fly to Mexico, the Caribbean, and Latin America. Southwest is really amping up its expansion plans for 2015. It will be a HUGE jump in revenues! The company truly believes that it has more opportunities than they have airplanes over the next five years. With the acquisition of AirTran, Southwest has jumped into international operations which typically has much higher margins and less competition than the domestic routes.
Of course a rising tide lifts all boats. Around 210 million passengers, nearly 2.28 million per day, are expected to fly on U.S. carriers between June 1 and Aug. 31. That's up 1.5% from last summer and the highest since 2008. The first three months of the year are traditionally the hardest for airlines, as traffic slows from the busy holiday quarter. Airlines typically raise their ticket fees slightly during the peak summer travel season
If you track LUV’s performance over the last few years, it’s obvious that they will ride this trend for more earnings:
Revenue Earnings
2013 17,699 1.05
2012 17,088 0.56
2011 15,658 0.23
As we’ve seen in the other airline winners that $$$MR. MARKET$$$ has recently invested in (DAL and SAVE), the airline industry has turned itself around and has strong fundamentals going forward. There's great potential for future growth through the impact of acquisitions, expansion into additional markets, and growth in passenger fees. Southwest has differentiated itself by having a quality management team in place and generating an unbeatable string of consecutive years of profitability. The trend is indeed your friend. Southwest has shown a proven track record at earnings season. The stock has only missed once in the past two years, so it should have no trouble smashing the ANAL-ysts estimates of $1.50/share in 2014.
After another great earnings beat last month, this is what their boss had to say:
Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer, stated, "I am delighted to report record first quarter earnings, which increased significantly year-over-year, despite the disruption caused by more than 7,500 of our flights canceled due to extreme weather conditions and the impact of the shift in timing of the Easter and Passover holidays. This outstanding performance was driven by record first quarter operating revenues of $4.2 billion, and a 1.2 percent year-over-year decline in total operating costs, excluding special items, driven largely by lower fuel prices and our ongoing fleet modernization. Our record first quarter operating income of $242 million, excluding special items, was very strong, especially considering an estimated $50 million unfavorable impact from winter storms. Operationally, our Employees did an outstanding job in difficult conditions taking care of our Customers, and I thank them again for their efforts.
"Our first quarter 2014 earnings performance is a superb start to the year and on plan to achieve a 15 percent pre-tax return on invested capital for the year, excluding special items. Second quarter 2014, benefiting from the Easter and Passover holidays, also is off to a great start, with strong bookings, favorable revenue trends, and stable fuel prices.
"Our balance sheet, liquidity, and cash flows remain strong. We are actively managing our debt and total invested capital, while making strategic investments that have already contributed significantly to our record profitability. We were pleased to return $371 million to Shareholders during first quarter 2014 through the payment of $56 million in dividends and the repurchase of $315 million in common stock. Since August 2011, we have returned $1.6 billion to our Shareholders through share repurchases and dividend payments.
"Our five strategic initiatives are on track and meeting or exceeding expectations. In January, we deployed our international reservation system and began selling Southwest's inaugural international service to Aruba, The Bahamas, and Jamaica, scheduled to begin July 1, 2014. We quickly followed with selling Southwest service to Cancun and Los Cabos, scheduled to begin August 10, 2014. By the end of this year, we intend to fully convert AirTran's seven international markets, along with its remaining domestic markets, to the Southwest route network. We have converted 21 of the 52 AirTran Boeing 737-700s to the Southwest Evolve configuration, and plan to convert the remaining 31 -700s this year. This will complete the AirTran integration and retire the brand by the end of 2014.
"We have a significant amount of fleet activity planned this year, as we wind down the AirTran brand and continue to modernize our fleet, resulting in a larger than normal number of aircraft out of scheduled service. Accordingly, we expect relatively flat 2014 available seat miles, year-over-year.
"Our network development and optimization results, to date, have been excellent. We are excited about the opportunity to add new service to New York LaGuardia, Washington Reagan National, and Dallas Love Field this year, as well as to the international terminal under construction at Houston Hobby next year. Looking ahead to 2015, while we have not finalized our fleet and capacity plans, we have been managing to a baseline of 695 aircraft, which was our combined fleet at the time of the AirTran acquisition. We are planning year-over-year growth in our available seat miles derived from increased fleet utilization resulting from the completion of the AirTran integration and the increase in seats from the upgauging of our fleet. Of course, this will drive significant unit cost benefits."
“After the rough decade that Southwest Airlines and its shareholders have endured, today is definitely a cause for celebration.”
The was rather long winded but you can’t blame this guy for bragging. I’ll be celebrating within the next couple of months when I book this profitable trade. Then I’ll fly first class on my next trip to Houston Nutt.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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