Boeing delivered a record number of jets last year. Meanwhile, more consumers are taking to the skies as a booming economy helps increase discretionary spending and fuel more opportunities to travel.
On the upcoming webcast, An Airline Sector Strategy Including Boeing, American, United, Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, will identify strong tailwinds in the global airline industry and help advisors consider ways to enhance a portfolio through the growth opportunity in the transportation segment.
Specifically, investors can look to the U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, to access the growth opportunity.
There are encouraging fundamental factors that supporting the airlines, including low oil prices – fuel is the largest input cost for airlines. The improving U.S. economy could also encourage more business and leisure travel and airlines are generating impressive amounts of cash.
Along with lower oil prices, airline stocks look attractive in their own right. For instance, income-oriented investors may notice that airline stocks have seen improved dividend-yield growth. The sector also shows relatively cheap valuations.
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. JETS is trading at a 10.0 price-to-earnings and a 2.2 price-to-book, compared to the S&P 500’s 16.9 P/E and a 2.8 P/B.
Top holdings include United Continental (NYSE:UAL) 12.1%, Delta Airlines (NYSE:DAL) 11.8%, Southwest Airlines (NYSE:LUV) 11.6%, American Airlines Group (NYSE:AAL) 11.4% and Allegiant Travel (NYSE:ALGT) 4.0%. Airlines make up the lion’s share of the portfolio at 86.5%, and the ETF includes some other sub-sectors like aerospace & defense 7.9%, manufacturing 3.0%, software 1.0% and transportation infrastructure 1.0%.
The JETS ETF also includes some foreign exposure. While the U.S. makes up 80.4% of the fund’s portfolio, the ETF also holds UK 3.0%, Canada 2.0%, Israel 2.0% and Turkey 1.0%, among others.
Financial advisors who are interested in learning more about the airline industry can register for the Thursday, April 12 webcast here.