The airline sector may be experiencing some rough turbulence now, but the industry has flown through storms before. As one of the most exposed industries to global travel disruptions, airlines have seen a deeper selloff than the market and now look like an attractive bargain.
In the upcoming webcast, Airlines Have Weathered Storms Before, Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors, will consider the impact of COVID-19 on global airline stocks and consider the potential long-term benefits of entering the market during a recovery period.
Investors can look to the U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, to access the growing global airline industry. JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies.
“On a shorter-horizon basis, now is beginning to look like an attractive time to consider buying into the industry,” according to U.S. Global.
Additionally, history doesn’t always repeat, but it often rhymes, and that’s notable when it comes to buying airline dips.
“When stocks turned negative compared to the same time a year earlier, it created an attractive buying opportunity that could have resulted in healthy returns,” according to U.S. Global. “For instance, if you bought airline stocks in March 2009, near the bottom of the financial crisis, and held until March 2010, you would have seen a profit of nearly 80 percent. Returns would have been even better at 166 percent if you entered in September 2011 and exited in November 2013.”
Investing in airlines now can also be a strategic move to capitalize on lower fuel costs, with Brent crude oil prices in freefall this year, as well as coronavirus-impacted travel, which has depressed travel stocks, including airliners. Fuel remains one of the biggest expenses for airlines, and those not already hedged to prices could see benefits from lower costs.
Furthermore, the domestic airline industry could enjoy the boost from fiscal stimulus in the wake of the COVID-19 epidemic.
Financial advisors who are interested in learning more about the airline sector can register for the Tuesday, May 18, webcast here.