Time to Fly with Alaska Air

08/07/2014 7:00 am EST

Focus: STOCKS

Yes; we are going to have a correction. History, which repeats itself in cycles, indicates that we are due for one. So what? Corrections and bear markets provide us with wonderful opportunities to invest in additional undervalued stocks, asserts Russ Kaplan, editor of Heartland Advisor.

It is natural for the market to encounter corrections and bear markets. However, corrections don’t last very long. And a well-managed financially solid company stock will bounce back up.

Trying to time the market has been shown over and over again to be a loser’s game. If you sell a good stock when the market is high, when do you get back in to reinvest? Evidence shows that those who sell are rarely able to get back into their sold stocks at the right time and usually end up missing opportunities for further gains.

My latest new recommendation is Alaska Air Group (ALK). For a long time, the airline industry has been swamped with problems, but with airlines consolidating, I believe it is time to invest in a stock in this industry.

Alaska Air was founded in 1932 during the Great Depression and years before Alaska became a state. How’s that for planning ahead? Partly through its purchase of Horizon Air, Alaska Air serves several cities in the United States, Canada, and Mexico.

This company is headquartered out of SeaTac Airport, in Seattle, Washington. The airline has been highly profitable in the last several years, but I don't think this is fully represented by the price of the stock.

It is still undervalued. For example, it has a price earnings ratio of only 5, one of the lowest for a blue chip stock. Alaska Air pays a dividend of 1.2% so this is not a stock for the income-oriented investor.

Bradley Tilden, who owns 112,000 shares of Alaska Air stock, heads the company. Their other officers and directors also are heavily invested in the airline’s stock, giving them the long-term commitment and perspective we look for when selecting a solid undervalued stock.

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