Overall, the market and most leading stocks remain in uptrends, so we remain optimistic and are holding our strong performers, notes Mike Cintolo; the growth stock expert and editor of Cabot Top Ten Trader highlights two recent ideas in the airline sector.

United Continental (UAL) is no secret to anyone, with the firm’s massive fleet of planes (768 mainline aircraft and 554 regional aircraft by year-end; total fleet up 4.7% from year-end 2017) shuttling millions of passengers around the globe.

Industry consolidation (less competition) and an avoidance of price wars helped United and other peers see earnings boom from 2013 through 2015, though the past few years have seen earnings level out (albeit at high levels).

Now investor perception is improving, with already-elevated earnings beginning to push higher (with more likely to come) thanks to a strong economy, moderating fuel prices and, for UAL, its continued fleet expansion.

For 2018, the company sees total capacity rising nearly 5% and traffic growing faster than that (up 7.2% and 6.9% in June and July, respectively; August’s report should be out next week), leading to big earnings (north of $8 per share) and free cash flow (already totaling $2.4 billion in the first six months of the year).

With continued modest price and traffic hikes (the firm just upped its checked baggage fee to $30 from $25), analysts see earnings up around 20% both this year and next.

Airline stocks aren’t exciting, but when they get going they can really move—UAL’s last uptrend took it from 30 in March 2013 to 75 by January 2015. After that, it was a very long slog (shares were at 73 in July of this year!), but the earnings gap in July and relatively persistent upside since then looks like a change in trend. We think dips are buyable.

Spirit Airlines (SAVE) is the largest ultra low-cost carrier in the country, with more than 500 daily flights to 67 destinations (including 88% of the top 25 U.S. metro areas).

The attraction here is price — Spirit claims its airfare is 35% cheaper than the average competitor because of its cost structure (high seat density airplanes, high aircraft utilization, efficient use of gates, etc.), and the firm relies more on ancillary revenue (which is less susceptible to price wars) than its peers.

And management thinks its cost advantages will only grow during the next few years! As for the stock, it’s strong partly because investors think the sector as a whole is turning the corner, and for Spirit in particular, because new capacity and costs getting under control is leading to accelerating revenue growth and (soon) a pickup in earnings.

For the year, Spirit anticipates total capacity to be up a whopping 23%, while revenue per seat mile flown is expected to pick up starting in the current quarter.

While earnings took a hit last year and should be flat-ish this year, the bottom line should grow north of 20% in Q3 and nearly 30% for all of 2019. Throw in a strong environment for consumer spending and a reasonable valuation (15 times earnings) and we think the stock can have a good run.

SAVE has had a rough few years, topping at 85 back in 2014, falling to 33 a year later and actually tapping a new correction low of 30 about a year ago.

But after multiple successful tests of the 35 area this year, the stock has not only perked up, but begun to advance persistently—shares have risen in a straight line since early July and reaching their highest level since last July. We think dips or shakeouts will lead to higher prices.

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