Hey everyone, I’m Joshua Rodriguez, the founder of Alpha Stock News’ parent company, CNA Finance, LLC. I’m writing this note to inform you that I have decided to add American Airlines stock to my investing portfolio. Here are the factors that played a role in my decision:
Check out Joshua’s investing portfolio here.
AAL Stock to Benefit Greatly From COVID-19 Vaccine
Recently, Pfizer and BioNTech announced overwhelmingly positive data from a clinical study of their COVID-19 vaccine candidate. As a result, I believe that the vaccine will be available for compasionate use later this year with mass availability of the vaccine within the next 12 months.
COVID-19 has greatly impacted airline stocks as consumers were told to stay home, and still fear being stuck in a small area with other, potentially infected consumers. However, as the vaccine becomes available, consumers will not only be willing to travel, but have a burning desire to do so as a result of months of being stuck at home.
As a result, I’m expecting to see slow, gradual increases in revenue until a vaccine is available. Once a vaccine becomes widely acceptable, I expect we will see a boom in air travel, ultimately leading to a substantial increase in revenue for AAL and other stocks in the airline industry.
Increasing Investor Interest
Over the past month, AAL stock has been mentioned quite a bit more on message boards. I have also noticed a spike in searches for AAL on both Alpha Stock News and CNA Finance. Ultimately, market participants determine the direction of price movement. When the overwhelming belief is that a stock’s price will increase, the masses buy in, making the belief a self-fulfilling prophecy.
Based on the fact that AAL is seeing increased search and social volume, I believe that the investing community is starting to see American Airlines stock as undervalued and get behind it.
Year to date, American Airlines has given up well over 50% of its value. The declines are directly correlated with the COVID-19 pandemic. As the COVID-19 pandemic comes to an end, AAL stock is likely to make a strong recovery. In fact, it’s my belief that the stock will be trading in the $25 per share range by the end of 2021. As such, purchasing the stock at my entrance price of $12.02, suggesting a 107.9% implied upside.
Root for the Underdog
I have experienced incredible results rooting for the underdog in the past, and that’s what I’ve decided to do here. To be honest, prior to COVID-19, AAL stock was already feeling a little pain due to weakening revenue and earnings. However, post-COVID-19, I believe we’re going to see some big changes.
Due to the economic hardships caused by COVID-19, consumers are likely to be more focused on price, making discount airlines like AAL appealing. Furthermore, in order to build a reputation as a quality post-pandemic airline, American Airlines is likely to focus on areas of service in which it may have lacked in the past.
Ultimately, the pandemic gives the company the opportunity to change general consumer conception of their airline, and I believe AAL will take full advantage of this opportunity.
The Bottom Line
American Airlines, like many in the service sector, is beaten and tattered, but it is not down for the count. I’m banking my own money on a strong recovery in the stock!
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