Can I really be recommending an airline stock — especially after Warren Buffet just got done selling all of his airline holdings? asks Nate Pile, editor of Nate's Notes.
Yes, it is true — though the recommendation for Alaska Air (ALK) does come with a couple of important caveats! First, unlike most other stocks in this newsletter, I am not not making this recommendation with the same minimum 3 to 5 year time horizon that I usually take when buying new stocks.
Rather, I am making the recommendation in anticipation of an eventual rebound (be it partial or full) in the price of the stock once the outlook for travel starts to become less uncertain.
Given the strength of Alaska’s balance sheet relative to most others’ in the industry, along with how the stock has been acting following its initial slide, I believe it will likely be one of the better performing airline stocks if/when the industry starts to recover.
And, even if the recovery takes even longer than feared, the company ought to be able to weather the storm better than most of its peers.
In addition, though I do not envision holding the stock for an extended period of time, I do plan to make small purchases this month and for at least two more months — assuming the stock has not risen too much between our monthly issues.
If you decide to get involved, you are also encouraged to make several smaller purchases over time rather than making just a single large purchase all once, especially since this sector will almost certainly experience another leg down if the market does decide to retest the March lows.
Naturally, if the stock and sector end up holding their own through any market sell-offs that may develop, you should view it as an excuse to become more aggressive. For now, Alaska Air is a buy under $36 and a strong buy under $26.
