Airline stocks like Delta Air Lines (DAL), United Airlines (UAL) and American Airlines (AAL) have been flying high this year. Now Copa (CPA) — which holds the top rating among airline stocks in IBD Stock Checkup — has taken a first-class seat on that flight.
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Investors should not assume that the saying “a rising tide floats all boats” will also mean that rising travel demand will lift all airline stocks. But recent action has airline stocks on Wall Street’s radar.
Delta just posted 572% earnings growth, but pulled back on a soft outlook for Q1. UAL, AAL, Ryanair (RYAAY) and Alaska Airlines (ALK) have also signaled a yearning to take to the skies as the pandemic finally fades away.
Copa took a solo flight on the latest list of new buys by the best mutual funds, as DAL, UAL and the other airline stocks failed to make this stock screen. But United Airlines, which has a strategic alliance with Copa, joins CPA stock on the IBD 50.
Copa sports a 97 Composite Rating. Other than UAL, which just climbed to a 90 Composite Rating, none of the other airline stocks score above 90.
Copa Could See EPS Growth Soar A Stunning 14,131%
Copa Airlines was founded in 1947 as the National Airline of Panama. Today it is a leading Latin American provider of airline passenger and cargo service. The Copa holding company has two principal operating subsidiaries, Copa Airlines and Copa Colombia.
The former operates from its strategically-located position in the Republic of Panama. Copa Colombia flies from Colombia to Copa Airlines’ Hub of the Americas in Panama. Copa Colombia also oversees Wingo, a low-cost business model within Colombia and various cities in the region.
From Q3 2021 through Q2 2022, Copa posted four quarters of triple-digit earnings growth. Note, however, that those numbers are based on comparisons to prior-year quarters that showed a loss. Showing its ability to stand up to tougher year-over-year comparisons, Copa delivered 316% EPS growth in Q3, showing a rise to $2.91 earnings-per-share.
Analysts expect another strong quarter when the airline reports on Feb. 14, with a forecast for 96% earnings growth. That has Wall Street calling for an astronomical EPS increase of 14,131% for the full year.
Copa is expected to return to earth in 2023 with a 26% rise in earnings.
Sales growth has also been impressive, but has slowed in recent reports. Over the last four quarters, revenue growth has gone from 262% in Q4 2021 to 82% in Q3 2022.
Bases And Breakouts Among Airline Stocks
With earnings on the horizon, Copa has just soared to the top of its buy zone from a 46-week-old cup with handle with a an 89.27 buy point.
Reflecting the downturn and emerging recovery in airline stocks, it was a first-stage base since Copa undercut the low in its prior pattern to reset the base count.
Before taking off for its big gain today, on Thursday, Copa rose nearly 3% in volume 158% above average.
Meanwhile, United Airlines has rebounded to soar climb beyond its prior buy zone after flashing a sell signal in mid-December. Delta is extended from an early entry and continues working its way toward a 46.37 buy point. While down for the day, DAL stock closed the week up nearly 6%. .
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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