Airline stocks and sector-related exchange traded funds received a big endorsement from Warren Buffett as the investment guru revealed his optimism over the airline industry’s outlook.
“I wouldn’t rule out owning an entire airline,” the billionaire investor and Berkshire Hathaway CEO told CNBC.
In his annual letter, long-time value investor Buffett remarked that his company is searching for deals but is struggling to find one for a good price. However, there might be value in airline stocks as these companies are trading at lower multiples than the broader S&P 500.
For instance, the U.S. Global Jets ETF (NYSEArca: JETS), the only dedicated airline industry ETF, shows a 10.6 price-to-earnings ratio and a 2.34 price-to-book, compared to the S&P 500’s 19.8 P/E and 3.1 P/B.
Buffett previously surprised investors in 2016 after Berkshire took on positions in the largest U.S. airliners, including American Airlines, Delta Air Lines, United Continental Holdings and Southwest Airlines, which were among Berkshire’s recently disclosed investments.
The four Berkshire Hathaway airline positions are also the top four component holdings of the JETS ETF.