The airline sector and related exchange traded fund are enjoying record profitability and additional tailwinds, with even investment guru Warren Buffett taking a second look at the industry.
On the upcoming webcast, Why Buffett Changed His Mind About Airlines, Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, will take a bird’s-eye view of the airline industry and look at the emerging new business environment after years of consolidation.
“Airline stocks recently made a 52-week high and are still the least expensive industry within the S&P industrial sector,” Holmes told ETF Trends in a call.
The U.S. Global Jets ETF (NYSEArca: JETS), the lone dedicated airline ETF, surged 23.5% over the past three months and was up 13.4% year-to-date. Nevertheless, JETS is “still inexpensive,” Holmes said.
JETS currently trades at a 9.64 price-to-earnings and a 2.09 price-to-book. In contrast, the Industrials Select Sector SPDR (NYSEArca: XLI), which tries to reflect the performance of the S&P Industrial Sector Index, has a 19.32 P/E and a 3.78 P/B and the broader S&P 500 Index is trading at a 19.37 P/E and a 2.71 P/B.
The airline industry is one of only a few cheaply valued segments of the aging bull market. Long-time value investor Warren Buffett has also recently warmed up to the space, with Berkshire Hathaway purchasing shares in American Airlines, United Continental and Delta as of September 30, and CNBC reported that Berkshire acquired shares of Southwest Airlines after September 30.
ETF investors can gain diversified exposure to the airline industry through JETS. The airline ETF includes a modified weighting methodology, which includes a 13.5% tilt toward United Continental, 12.9% Southwest Airlines, 12.7% Delta Airlines and 12.6% American Airlines Group, along with smaller positions in other American companies like 4.6% Spirit and 4.5% JetBlue, among others.
JETS, though, is not focused on U.S. names. The ETF includes global airline industry, airline operators and manufacturers, with smaller tilts toward companies located in Germany, Canada, Ireland, Australia, the U.K., Switzerland, Japan, France, Turkey, Mexico, Sweden and Israel.
Financial advisors who are interested in learning more about the airline industry can register for the Thursday, December 15 webcast here.