Today’s new recommendation comes from the latest issue of Dow Theory Forecasts, edited by Richard Moroney. Moroney just added this budget airline stock to the newsletter’s portfolio based on its strong earnings growth.
“Southwest Airlines Co. (LUV), the largest carrier in the U.S. by passengers flown, is being added to the Long-Term Buy List. Until recently, high fuel costs have muted some of the operational gains coming from Southwest’s acquisition of AirTran in May 2011. But fuel costs are subsiding and ticket prices mostly holding.
“The consensus projects 107% profit growth in the June quarter and 86% for the year, and estimates are on the rise. Shares trade at just 12 times estimated 2012 earnings. The stock earns a Financial Strength score of just 27, but Southwest has improved its balance sheet and enjoys the strongest finances in its industry. Southwest is being initiated as a Long-Term Buy.”
- Richard Moroney, CFA, Dow Theory Forecasts, July 16, 2012