Delta Air Stock Analysis
Delta Airlines stock has been all over the place over the past few months. However, if you look at analysts reports, the stock is expected to rise, and while I don’t always agree with analysts, in this particular case, I believe that they’ve hit the nail on the head. Ultimately, there are three factors that are likely to push Delta Airlines stock skyward. Today, we’ll talk about those factors and what to watch ahead.
Factor #1: Economic Conditions
Delta is a company that is poised to take advantage of improving economic conditions. You see, while most companies are susceptible to changes in tides in economic conditions, few are quite as susceptible to these types of changes as airlines. The bottom line here is that flight is the most expensive way to travel, and during poor economic conditions, simply put, less people fly.
However, the tides are changing in the United States and that’s a great thing for Delta. You see, when Donald Trump was elected as the President of the United States, consumers, investors and businesses started expecting to see improvements. Well, those expectations have started to turn into a self-fulfilling prophecy. In fact, due to the strong economic conditions as of late, the Federal Reserve felt comfortable increasing its interest rate once again!
Factor #2: Oil
Another major factor that’s leading to gains in Delta Airlines and other airlines has to do with the price of oil. You see, the single largest expense to any airline is the cost of jet fuel; and since jet fuel is derived from oil, the price of oil plays a key role. When the price of oil climbs, it eats into Delta’s margins, leading to declines in the value of the stock. However, when the price of oil falls, the costs to Delta start to sink, causing growth in margins and gains in the stock.
At the moment, tides are changing for oil as well, adding to the compounding perfect storm for the stock. You see, toward the end of 2016, the price of oil started to climb as OPEC nations agreed to production cuts. However, more recently, we’ve seen that production isn’t being cut quite as much as expected. On top of that US production is climbing, and stockpiles are starting to head upward once again. As a result, the law of supply and demand tells us that the price of oil must fall, and that’s exactly what we’re seeing in the market.
Factor #3: Delta Itself
When comparing Delta to any other airline stock, well the comparison is a no-brainer. At the end of the day, the company has more cash on hand than even American Airlines, manageable debt, and has consistently shown the ability to grow. So, with everything heading up for airlines, investors will be looking at these companies, and with Delta being the frontrunner on a fundamental side, it’s likely to take a big chunk of the airline sector interest.
At the end of the day the time is high to look into airline sector stocks, and I suggest that you do so. When you do your digging, you’ll quickly find that not only is the airline sector doing incredibly well, Delta is a top pick in the sector.
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