Ranking the 7 Top Airline Stocks to Buy From Best to Worst

One of the sectors hardest hit after the start of the pandemic focused on air transport, which brought a tough time for top airline stocks to buy. After all, at some point between February and April 2020, air passenger revenue miles dropped by nearly 97%. During the worst of the crisis, many analysts feared the worst for the industry.

Fortunately, fears of the pandemic have subsided. In addition, government agencies around the world have reduced or completely eliminated mobility restrictions. This sparked intense interest in travel, especially as the mass cabin fever increased over a roughly two-year period. Therefore, the best airline stocks to buy currently make sense. Still, to be neutral, most companies in the aircraft industry don’t pass the test. Even for those who do, not every name offers the same magnitude of stability.

Below are the best airline stocks to buy, from best to worst.

AAL American Airlines $13.98
CPA Copa Holdings $74.40
ATSG Air Freight Services $27.08
AFLYY Air France – KLM $1.53
AGZNF Aegean Airlines $4.50
DLAKY German Lufthansa $6.51
ANZFF Weather New Zealand $0.44

American Airlines (AAL)

Source: Shutterstock

one of the largest carriers in the USA, American Airlines (NASDAQ:AAL) currently has a market capitalization of $9.09 billion. Year-to-date, AAL has reduced approximately 27% of its equity value, reflecting broader market concerns. However, over the following month, AAL gained almost 8%, inspiring some confidence among opposing speculators.

Basically, the American can benefit from its partnership with the United States. Japan Airlines (OTCMKTS:JAPSI). Recently, the island nation has opened up to foreign tourists without special restrictions, thus attracting great travel interest. Combined with the weakness of the Japanese yen against the dollar, American tourists could theoretically enjoy a shopping bonanza.

According to Gurufocus.com, the AAL is modestly undervalued. First, American has an advanced 7.6 times price-to-earnings ratio. In contrast, the industry median is just over 11 times. To be fair, other metrics in the company’s financial statements don’t offer an encouraging picture, such as a balance sheet that could benefit from support. But still, the reopening of major international travel destinations could bolster AAL as one of the best airline stocks to buy.

Copa Holdings (CPA)

Copa plane covered with white clouds mid-flight.  CPA stock

Source: Carlos Yudica/Shutterstock.com

Headquartered in Panama City, Panama, Copa Holdings (NYSE:CPA) is the parent company of Panamanian carrier Copa Airlines. Additionally, the company also owns Colombian airline Copa Airlines Colombia. Currently, Copa Holdings has a market capitalization of $2.94 billion. Since the beginning of the year, the CPA has dropped a little less than 10%. This is impressive damage control, given the massive losses on the major indexes.

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While it’s not the most popular brand among US-based investors, investors should pay attention to CPA stock. According to Gurufocus.com, the company has a modestly undervalued business. The Copa is booming in terms of profitability, while long-term revenue trends may need some adjustment. For example, its net margin is about 12%. It ranks better than about 70% of its peers.

In addition, Copa’s return on equity is 21.4%. In contrast, the industry median is 7.9%. Thus, the company is doing a quality job despite the shocks the underlying industry absorbs. That’s why it’s worth considering for the best airline stocks to buy.

Air Freight Services (ATSG)

two women carrying luggage at an airport

Source: Shine Nucha / Shutterstock

an American aviation holding company, Air Freight Services (NASDAQ:ATSG) provides air cargo transportation and related services to domestic and foreign air carriers. In addition, such services are provided to businesses that outsource their air cargo lift needs. While ATSG isn’t the most direct play among the best airline stocks to buy, it deserves notable consideration.

Currently, Air Transport has a market capitalization of $2.01 billion. Since the beginning of this year, ATSG has dropped “only” 9% (relative to the new normal headwinds), reflecting tremendous flexibility. Going forward, Air Transport represents one of the few names to inspire confidence in the broader air travel segment.

According to Gurufocus.com, ATSG rates are quite valuable. Against traditional metrics like PE ratios, the ATSG is basically middle of the road. However, the company has strong metrics related to its income statement. For example, Air Transport’s three-year revenue growth rate is 20.3%, ranking better than its peers at 88%. On the profitability side, the company has a net margin of 11%, above the industry average. It also has a return on equity of around 17%, reflecting a quality business.

Air France – KLM (AFLYY)

close-up image of an aircraft engine

Source: frank_peters / Shutterstock.com

While the topic of this article is the best airline stocks to buy, it is also a relative theme. Presumably, analysts could argue that no aircraft has offered a comprehensively compelling upward narrative. Feelings for travel are likely to erode as fears of a global recession dominate the headlines. However, if you have the opposite belief, Air France – KLM (OTCMKTS:AFLYY) deserves consideration.

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Currently, Air France has a market capitalization of $3.93 billion. Since the beginning of the year, AFLYY has experienced an alarming 67% decline. I mention this because it’s one of the best airline stocks to buy, and it’s not for the faint of heart. But basically, Air France can meet demand from the wealthier segments of society with the complete reopening of many European destinations. It is also important to note that the dollar and euro are currently close to par. Effectively, this dynamic means that the American tourism dollar can travel more than before.

According to Gurufocus.com, AFLYY rates it as modestly undervalued. Specifically, the price-to-sales ratio is 0.1 times, below the industry median 1.02 times.

Aegean Airlines (AGZNF)

Picture of an airplane flying with the sun in the background.  Airline Shares to be Purchased and Held

Source: Shutterstock

A lesser known but intriguing idea among the best airline stocks to buy is Aegean Airlines (OTCMKTS:AGZNF) represents the flag bearer of Greece. Moreover, according to its corporate profile, Ege is the largest Greek airline in terms of total number of passengers carried, number of destinations served and fleet size. Currently, the company has a market capitalization of €412.6 million (roughly equivalent to $406.9 million).

Since the start of this year, AGZNF has dropped 14.3%, which isn’t all that bad given the broader circumstances. Also, as with Air France-KLM above, if travelers target destinations in Europe due to the favorable (for Americans) exchange rate, the Aegean can gain organic advantages downwind. According to Gurufocus.com, AGZNF considers it a modestly undervalued investment.

Interestingly, the Aegean has a price-to-owners-earnings ratio of 2.8 times, positively below the industry median of 10.4 times. Perhaps most importantly, the company boasts a 30% return on equity, ranking better than 85% of its peers.

Deutsche Lufthansa (DLAKY)

airline shares

Source: Shutterstock

Another name among the best airline stocks to buy that could benefit from European travel is: German Lufthansa (OTCMKTS:DLAKY). Representing Germany’s flag carrier, Deutsche Lufthansa, when combined with its subsidiaries, is Europe’s second largest airline in terms of passengers carried. Currently, the company has a market capitalization of $7.9 billion. Since the opening of January, DLAKY has fallen slightly less than 14%.

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According to Gurufocus.com, DLAKY considers it a highly worthy investment. While the underlying firm could use some improvements overall, a few positive data bounces are emerging. For example, Lufthansa’s price-to-free cash flow ratio is 2.75 times, well below the industry median of 9.2 times.

Now, where the company begins to be questioned is its long-term growth journey, stuck in negative territory. However, the fundamentals of European travel demand could correct this framework. For example, in the company’s second-quarter 2022 earnings report, Lufthansa reported revenue of $8.95 billion. This represented an increase of 131% over the previous year. It may therefore be too early to give up on DLAKY.

Air New Zealand (ANZFF)

a jet takes off on a clean runway.

Source: m.photo / Shutterstock.com

Weather New Zealand (OTCMKTS:ANZFF) may be the worst of the best airline stocks to buy. That doesn’t necessarily mean you should avoid Air New Zealand like the plague. If you are already interested in this industry, the company offers some positive points to consider. However, it’s definitely on the speculative side of the spectrum.

As you might have guessed, Air New Zealand represents the flag carrier of the nation of the same name. Due to its corporate profile, the company operates scheduled passenger flights to 20 domestic and 32 international destinations in 18 countries, primarily on the Pacific Coast. At the time of writing, Air New Zealand has a market cap of NZD 2.6 billion (roughly equivalent to $1.5 billion). ANZFF lost 57.5% YTD, reflecting the potential for significant rebound.

In financial data, Gurufocus.com labels ANZFF as modestly undervalued. The company has a 14.5 times Shiller PE rating, positively below the industry median of 16.7 times. It also manages a gross margin of 79.5%, ranking better than the industry’s 97%.

However, the company will need the spark of travel to the region to truly rebound. That’s the opportunity and that’s the risk with Air New Zealand.

At the time of publication Josh Enomoto It does not have any position (directly or indirectly) in the securities specified in this article. The views expressed in this article are those of the author and are subject to InvestorPlace.com. Publishing Guidelines.

Josh Enomoto, a former senior business analyst at Sony Electronics, has helped broker major contracts with Fortune Global 500 companies. Over the past few years, it has provided unique, critical insights for investment markets as well as a variety of other industries, including legal, construction management and healthcare.


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