- Outstanding Earning's Growth, expected to be well in excess of 20% over the next few years. Very low debt, strong cash flow.
- LUV is shielded the effects of a strengthening dollar because the majority of its operations are domestic. Other airline's with international exposure have been hurt by the stronger dollar.
- Lower oil prices equates to lower input cost and expanded profit margins.
- Bullish cup & handle on the weekly chart (pictured below)
From Q3 2015 Earnings Call, CEO Gary Kelly:
While it is true that the majority of the 71% surge in our earnings-per-share was due to a dramatic drop in jet fuel prices, there are a lot of other good things happening in this quarter. Our Rapid Rewards program continues to grow in terms of members and revenues and obviously the amended credit card deal is a highlight for the quarter and for future years.
Next, our core passenger business overall is solid and steady and that's despite the very brisk competitive environment that we find ourselves in. I'm especially pleased with our record load factor and record revenues considering the aggressive Dallas, Love Field expansion, the transition of the AirTran markets this year, the slot acquisitions at DCA and LaGuardia and our continuing international expansion.
Next, our cost performance was also very good. Profit sharing was up significantly and of course that’s a very good thing. Our nine-month accrual for profit sharing was a record $484 million and well earned by our people and of course they too are benefiting from dramatically lower fuel prices.
I haven't put this trade on yet, I'll be looking for an entry this week.
Stop Price: $44.50