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3 Airline Stocks With Long-Term Potential; Morgan Stanley Says ‘Buy’

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3 Airline Stocks With Long-Term Potential; Morgan Stanley Says ‘Buy’

The coronavirus pandemic crisis dealt a hard blow to the airline industry. Disruptions to trade and travel, social lockdown policies, and increased border restrictions were only the beginning of the troubles. Even though income collapsed, the airlines still had to maintain aircraft and hangars, pay leases on equipment and airport space, and meet their debts.

But the virus is starting to wane, and economies are coming back – and travel is starting to resume. The big question for the airlines is how many people are willing to book flights? There is no doubt that the pandemic will have cost the industry some potential passengers, people simply no longer willing to fly, but for many others, travel will remain essential.

How the industry will look in 2021 is still not clear, as Morgan Stanley transportation expert Ravi Shanker notes: “While the rising industry tide will lift all boats, we recognize that we are not out of the woods yet and that there is likely to be significant volatility in the next six months as the recovery takes shape.”

This does not stop Shanker from rating the airline stocks, nor does it stop him from choosing three tickers that are primed for strong gains as the industry comes back to life.

Using TipRanks’ Stock Comparison tool, we were able to evaluate these 3 airline players alongside each other to get a sense of what the analyst community has to say.

Southwest Airlines (LUV)

First on the list is Southwest Airlines, arguably the best airline operating in the US. Southwest has built its reputation on good customer service, and leveraged that to become the world’s largest budget airline. Its success has made it a long-time component of the S&P 500 index, and brought it 47 consecutive profitable years.

The travel restrictions put in place to combat the pandemic hurt the airline badly in 1H20. EPS turned negative in Q1, and the in Q2 the loss reached $2.67 per share despite the partial recovery that started in May and June.

That was the bad news. On the positive side, Southwest managed to finish the second quarter with plenty of cash on hand – over $14.5 billion in cash and cash equivalents combined. The company also has over $12 billion in ‘unencumbered assets,’ mostly wholly owned aircraft. The healthy liquidity situation has been a boon to Southwest; of the major American airlines, this is the only one with an investment-grade credit rating.

Morgan Stanley’s Shanker believes that Southwest is well-positioned to take off as restrictions ease heading into next year. He writes, “LUV is arguably the highest quality airline in the US… As a largely US domestic medium haul airline, we believe its network is in a sweet spot for a COVID rebound and it has… a loyal customer base.” He adds that the airline is especially “able to capitalize on share gain or M&A opportunities as other airlines falter/lag.”

In line with his optimism, Shanker rates LUV an Overweight (i.e. Buy). His $54 price target implies a 33% upside for the stock in the coming year. (To watch Shanker’s track record, click here)

With 10 “buy” ratings against just 3 “holds,” LUV shares have earned their Strong Buy consensus rating. The stock is selling for $40.50, and the average price target of $43.80 implies that there is room for 8% upside growth. (See LUV stock analysis on TipRanks)

Delta Airlines, Inc. (DAL)

The next airline on today’s list is Delta Airlines. Even after the coronavirus hit the industry, Delta’s position among the world’s largest airlines is secure; with $21.5 billion in market cap, $47 billion in total revenue last year, and ranks second in total number of passengers carried, fleet size, and revenue per passenger-mile. The airline routes its flights through nine hubs, with Atlanta being the largest.

All of that just goes to show the extent of the hit that the pandemic dealt. Delta reported a net loss per share of $4.43 in Q2, and quarterly revenues of $1.2 billion. The company described the magnitude of the pandemic crisis as “truly staggering.”

Fortunately for Delta, the company’s sheer size has given it resources to survive the corona crisis. The company took steps in the spring to improve liquidity, drawing on its $3 billion credit facility in March and, in April, issuing $1.5 billion in senior secured notes and opening an additional $1.5 billion in credit. More recently, Delta announced earlier this month that it will be opening another offer of secured notes and entering a new credit facility, with the two total $6.5 billion. That Delta can contemplate such a move despite the deep recent losses, is testament to the company’s fundamental strength as a leader in an essential industry.

Shanker rates Delta as another Overweight (i.e. Buy), writing, “DAL has some of the strongest customer satisfaction numbers among the other Legacy peers… With ample liquidity, we see limited liquidity risk here. Additionally, we continue to see DAL’s international alliances and partnerships as strategic assets…” Shanker describes the airline as “our preferred Legacy carrier.” His $50 price target indicates confidence in a 48.5% one-year upside.

Overall, the analyst consensus on Delta is a Moderate Buy, based on 7 review which include 5 Buys and 2 Holds. The stock’s trading price is $32.82; the average price target of $39.17 suggests it has room for 16% upside growth in the next 12 months. (See DAL stock analysis on TipRanks)

JetBlue Airways Corporation (JBLU)

Last up from out list of Morgan Stanley airline picks is JetBlue, another major name among the budget carriers. JetBlue is the seventh largest US airline, as ranked by passengers carried. The company, before the crisis, operated over 1,000 daily flights to destinations in the US and Latin America.

Unsurprisingly, earnings took a hit in the second quarter due to the effects of the pandemic. JetBlue reported a loss of $2.02 per share, on revenues of $215 million. The top line is down 89% since the end of 2019.

On some positive notes, JetBlue was the first major US carrier to implement a UV cabin cleaning system in response to the viral pandemic. The company undertook this step back in July, and boasts that it can use the system to clean an airliner cabin in just 10 minutes. And more recently, in response to the scaling back of the crisis, JetBlue announced that it will open 24 additional routes by year’s end. Destinations include Florida and the Caribbean and are scheduled to open in November and December.

In his review of this stock, Shanker was impressed by JetBlue’s ability to take early advantage of the travel industry’s gradual reopening.

“We like JetBlue’s significant exposure to the ‘Medium Haul’ US domestic market, which we believe is likely to be the first to return. Additionally, JBLU’s ‘snowbird’ network provides a significant upside as leisure travel returns,” the analyst opined.

With those advantages in mind, Shanker rated JBLU as Overweight (i.e. Buy), and his $16 price target implies an upside potential of 26% for the year ahead.

Overall, Wall Street is still cautious on JetBlue, based on 3 Buy ratings and 5 Holds issued in the past 3 months. With an average price target of $$12.17, the Street anticipates shares to stay range-bound for now. (See JBLU stock analysis on TipRanks)

To find good ideas for airline stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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Christine founded Sports Grind Entertainment with an aim to bring relevant and unaltered Sports news to the general public with a specific view point for each story catered by the team. She is a proficient journalist who holds a reputable portfolio with proficiency in content analysis and research.

Christine founded Sports Grind Entertainment with an aim to bring relevant and unaltered Sports news to the general public with a specific view point for each story catered by the team. She is a proficient journalist who holds a reputable portfolio with proficiency in content analysis and research.

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CDC study on COVID-19 in kids bolsters case for elementary school reopening

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CDC study on COVID-19 in kids bolsters case for elementary school reopening

WASHINGTON — Children under the age of 12 are much less likely than teenagers to contract the coronavirus, according to a study by the Centers for Disease Control and Prevention published on Monday. The study adds nuance to prior findings that the risk of contracting and dying of COVID-19, the disease caused by the coronavirus, increases with age. The reasons for the correlation are not yet entirely understood. 

The new study also found that Hispanic children were hit hardest by the coronavirus, composing 42 percent of all cases for which ethnic data was available. That highlighted another uncomfortable truth about the pandemic: People of color have been disproportionately affected by both its medical and economic ravages.

Masked schoolchildren wait to have their portraits taken during picture day at Rogers International School on Sept. 23 in Stamford, Conn. (John Moore/Getty Images)
Masked schoolchildren wait to have their portraits taken during picture day at Rogers International School on Sept. 23 in Stamford, Conn. (John Moore/Getty Images)

The new study does, however, appear to bolster the arguments of those who say that children should return to school instead of continuing with what has been, according to many accounts, a disastrous national experiment in distance learning. New York City has returned some children to school buildings and is expected to ramp up in-person instruction by the end of the week.

Officials in Washington, D.C. — where the president has been loudly calling for schools to reopen — have also told principals to prepare for reopening school doors in November.

CDC researchers analyzed data from early March, when schools across the country began to shut down, to mid-September, by which time many states had opened schools either partially or fully for in-person instruction. The researchers found that of the roughly 280,000 children who tested positive for COVID-19 during that time, 63 percent were between the ages of 12 and 17. Thirty-seven percent were ages 5 to 11.

“Incidence among adolescents was approximately double that among young children,” the study concludes. That seems to bolster the case for in-person instruction for elementary schoolchildren, who appear to struggle the most with computer-based remote learning. High school students, who are better equipped to utilize online learning platforms and less likely to require adult supervision, could presumably delay returning to classrooms longer because they are at a higher risk of becoming ill.

Kids were most likely to be infected by the coronavirus in the Southeast and the West, regions where some governors were slow to impose lockdown measures and quick to lift them. 

Masked children line up at a safe social distance before heading into a lunchroom at Woodland Elementary School in Milford, Mass., on Sept. 11. (Suzanne Kreiter/Boston Globe via Getty Images)
Masked children line up at a safe social distance before heading into a lunchroom at Woodland Elementary School in Milford, Mass., on Sept. 11. (Suzanne Kreiter/Boston Globe via Getty Images)

Children for the most part had mild infections, with only 1.2 percent hospitalized and 0.1 percent requiring intensive care. During the six months accounted for by the study, 51 children died of COVID-19, making for a fatality rate of 0.018 percent. About a quarter of both ICU admissions and fatalities were for children who had underlying medical conditions, such as diabetes, obesity and breathing problems.

The report did not speculate on why Hispanic children, who make up 25 percent of the nation’s population of children between the ages of 5 and 17, would suffer at a rate — 42 percent — much higher than their share of the population. Black children represented 17 percent of coronavirus cases and 14 percent of the relevant population. White children, about 50 percent of the population studied, accounted for 32 percent of the cases. 

Public health experts have suggested several reasons for these disparities, including the dearth of green space, adequate preventive health care and unhealthful food options in many communities of color. Hispanic adults, in particular, are likely to hold essential jobs that put them and their families at greater risk. 

The prevalence of multigenerational households, whether for cultural or economic reasons, could also be a factor in facilitating viral spread. 

The study calls for monitoring and mitigation strategies as communities across the country seek safe ways to reopen schools — and keep them open. A CDC guidance initially published in July says that “in-person schooling is in the best interest of students.” The bevy of studies published since then have not fundamentally challenged that assertion.

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Jack Quaid says ‘f*** Trump’ as dad Dennis clarifies COVID-19 PSA

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Jack and Dennis Quaid pictured in 2015. (Photo: Dimitrios Kambouris/Getty Images)

Jack Quaid left no doubts about his feelings on President Donald Trump in a tweet he sent over the weekend.

“Hey it’s 11:24pm on a Saturday and I just thought this would be a good time to say: F*** Donald Trump,” wrote Quaid, the 28-year-old son of Dennis Quaid and Meg Ryan.

The Boys actor’s comment came the same weekend that Politico reported his movie star dad, Dennis Quaid, was among the celebrities recruited to help “defeat despair” amid the COVID-19 pandemic in an upcoming tax payer-funded, $300 million ad campaign reportedly ordered by Trump himself. The ads are expected to “lean heavily on video interviews between administration officials and celebrities, who will discuss aspects of the coronavirus outbreak and address the Trump administration’s response to the crisis,” according to the news outlet.

The elder Quaid denied that was the case. While he acknowledged that he had recently done a PSA for Dr. Anthony Fauci, director of the National Institute on Health and Infectious Disease, and had Fauci on his podcast — as have other celebs — it was strictly to raise awareness and prevent further deaths from COVID-19. “It was in no way political,” he said, stressing that he was not paid. “In fact, Dr. Anthony Fauci and I both talked about it before, that it was not to be political. This virus is not political.” Quaid said his intention was to raise awareness of COVID-19 and the prevention of further deaths.

“NO GOOD DEED GOES UNPOLITICIZED,” the Frequency star said Sunday. He explained in a video message to followers that he was feeling “some rage” and “a lot of disappointment” about the reports he had done a campaign ad and endorsement of Trump.

Back in April, Quaid did back up Trump in an interview with The Daily Beast, when he said he thought the president was “handling [the pandemic] in a good way.”

Quaid is not the only recognizable name mentioned in reports about the planned ad campaign. Gospel singer CeCe Winans explained in a video post that while she had filmed a conversation with Surgeon General Jerome Adams that she had been invited to have, it focused on the importance of wearing a mask during the pandemic. “It was not political at all,” Winans said.

For the latest coronavirus news and updates, follow along at https://news.yahoo.com/coronavirus. According to experts, people over 60 and those who are immunocompromised continue to be the most at risk. If you have questions, please reference the CDC’s and WHO’s resource guides. 

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United Airlines pilots avert layoffs, other workers hope for bailout

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3 Stocks Flashing Signs of Strong Insider Buying

If you really want to know which stocks the experts – and those in the know – are buying, pay attention to what they’re doing. Stock reports, company reviews, and press statements are helpful, but you’ll get significant information from watching what the insiders are up to.The insiders – the corporate officers and board members – have to disclose when they snap up shares to prevent any unfair advantages. Tracking their stock purchases can be a useful strategy because if an insider spends their own money on a stock, it could signal that they believe big gains are in store.So, investors looking for stocks that may be flying ‘under the radar,’ but with potential to climb fast, watching for insider purchases identify some sweet market plays. To make that search easier, the TipRanks Insiders’ Hot Stocks tool gets the footwork started – identifying stocks that have seen informative moves by insiders, highlighting several common strategies used by the insiders, and collecting the data all in one place.Fresh from that database, here are the details on three stocks showing ‘informative buys’ in recent days.TravelCenters of America (TA)We’ll start with a company that you probably don’t think about often, but that does provide an essential service. TravelCenters of America is the largest publicly traded owner, operator, and franchisor of full-service highway rest stops in the US. TA started out operating truck stops for rest, repair, and maintenance, and has since expanded to full-service fueling stations offering both gasoline and diesel, fast-food restaurants, convenience stores, and other rest stop amenities. Their network of rest stops is part of the infrastructure that makes long-distance motor transport, both private and commercial, possible in the USA.As can be imagined, the social lockdowns and travel restrictions during the coronavirus pandemic were not good for TA. The good news is, the worst of the pandemic hit during Q1, and the first quarter is normally TA’s slowest of the year. This year, the first quarter showed a net loss of $1.81 per share. In the second quarter, when warmer weather normally leads to increased driving, the pandemic restrictions were also – at least partially – lifted, and TA reported a sudden turnaround, with a 59 cent EPS profit. Even so, that missed the forecast by almost a dime. The outlook for Q3, normally TA’s strongest of the year, is for EPS of 73 cents.Turning to the insider trades, Adam Portnoy of the Board of Directors has the most recent informative buys. Earlier this month, he purchased over 323,000 shares, laying out more than $5.32 million for the stock. Analyst James Sullivan, of BTIG makes two observations about TravelCenters. First, he points out, “The long-haul trucking industry has an approximate 71% share of total primary tonnage in the U.S. freight industry, making it the primary mode of freight transportation.” Sullivan then adds that this opens up opportunity for TA going forward: “The increasing demands of the nation’s large trucking fleets for consolidated service providers that can provide fuel and truck service on a national basis appear likely to drive additional consolidation in the industry.”Sullivan rates TA shares a Buy, and his $34 price target suggests the stock has an impressive 82% upside potential for the coming year. (To watch Sullivan’s track record, click here)Overall, shares in TA are rated a Strong Buy from the analyst consensus, based on 5 recent reviews including 4 Buys and 1 Hold. The shares are selling for $19.24, and the $22.70 average price target implies room for 18% upside growth. (See TA stock analysis on TipRanks)Highwoods Properties (HIW)The next stock is a real estate investment trust. Highwood operates mostly in the Southeast US, but also in Pittsburgh, where it acquires, develops, leases, and manages a portfolio of suburban office and light industrial properties.Where most companies reported heavy losses during the corona crisis, HIW saw revenues in 1H20 remain stable. EPS has grown sequentially into Q1 and remained flat in Q2 at 93 cents. Both quarter beat EPS expectations.Despite the solid financial results, HIW shares have still not recovered from the market collapse of midwinter. The stock is down 27% year-to-date.Through all of this, Highwoods has maintained its dividend, as is common among REITs. The company has a 17-year history of dividend growth and reliability, and the current payment of 48 cents per common share has been stable for the past 7 quarters. At this level, it annualizes to $1.92 and gives a yield of 5.8%.Highwoods’ insider trading has come from Board member Carlos Evans, who purchased 10,000 shares for $337,000 dollars last week. His move was the first informative buy on HIW in the last 6 months.Truist analyst Michael Lewis is impressed by the quality of HIW’s portfolio. He writes, “We continue to believe that HIW’s portfolio is one of the best-positioned among traditional office REITs in light of the COVID-19 pandemic. Rent collections have been excellent and there are no large near-term lease expirations. More broadly, the portfolio should benefit from being focused in drivable, close-in Sunbelt suburbs.”In line with these comments, Lewis rates the stock a Buy. His price target, $45, indicates a 31% potential upside from current levels. (To watch Lewis’ track record, click here)Overall, HIW has a cautiously optimistic Moderate Buy consensus rating from the Street. This breaks down into 2 Buy ratings and 1 Hold. We can also see from TipRanks that the average analyst price target is $43, which implies a ~25% upside from the current share price. (See HIW stock analysis on TipRanks)VEREIT (VER)The last stock on our insider trading list is another REIT. VEREIT is major owner and manager of retail, restaurant, and commercial real estate, with a portfolio that includes over 3,800 properties worth a collective $14.7 billion. The company’s assets are 45% retail and 20% restaurants; the rest is mainly office and light industrial sites. The total leasable square footage is 88.9 million square feet.So VEREIT is a giant in the REIT sector – but size didn’t protect it from the general downturn this year. Share performance has been lackluster, and revenues have been falling off gradually since Q4 of last year. The second quarter results showed $279 million on the top line, the lowest in a year – but the quarter also saw earnings turn back upwards, reaching 17 cents per share.VER cut back on its dividend earlier this year, reducing the payment to 8 cents per share to keep it in line with earnings. That dividend has been maintained, and the next payment is set for mid-October. The current dividend yield is 4.5%, well over double the average found among S&P stocks.The big insider trade on VER comes from Board member and CEO Glenn Rufrano. He spent over $252K on a block of 40,000 shares, pushing the insider sentiment on this stock into positive territory.Covering the stock for JPMorgan, 5-star analyst Anthony Paolone sees an important strength in VER, noting that the company has been successful in collecting rents during the crisis period. “[Its] collections showed good improvement going into July, with 85% collections in 2Q and 91% in July; when considering all the abatements and deferrals, it appears that at this point about 94% of pre-COVID contractual rental revenue has been addressed, and it seems to us that a normalized run rate for this vast majority of the portfolio should take hold in early 2021; the company is making progress in working through the remaining 5-6% of non-collections,” Paolone noted.Paolone gives VER an Overweight (i.e. Buy) rating, and his $8 price target implies a 22% upside for the next 12 months. (To watch Paolone’s track record, click here)All in all, VER has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 5 analysts polled in the last 3 months, 3 are bullish on the stock, while 2 remain sidelined. With an 11% upside potential, the stock’s consensus target price stands at $7.25. (See VEREIT’s stock analysis at TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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Christine founded Sports Grind Entertainment with an aim to bring relevant and unaltered Sports news to the general public with a specific view point for each story catered by the team. She is a proficient journalist who holds a reputable portfolio with proficiency in content analysis and research.

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