US Airways (LCC) may be recovering from hard times.
Company
U.S. Airways operates about 3,000 flights per day for both passengers and cargo all over the world. The company has hubs in Charlotte, Philadelphia and Phoenix. It was founded in 1981 and headquartered in Tempe, Arizona.
Possible Turnaround
George Putman edits a top performing investment newsletter called “The Turnaround Letter.” It focuses on stocks that Putnam believes will recover from bad news and depressed prices. Here’s what he says about airline stocks, including U.S. Airways:
"Delta (DAL) , UAL (UAUA) and US Airways Group (LCC) were forced into bankruptcy in the mid-2000's because of over-expansion, poor cost-control and weak balance sheets. When they emerged a few years later, all three airlines enjoyed a brief period of strong stock performance before soaring oil prices and the weakening global economy brought them down again. However, they have maintained the fiscal discipline that they learned in Chapter 11, and now appear poised to perform well if the economy continues to recover."
Performance
The shares of U.S. Airways have performed extremely well in 2010. The stock is up 76.45% while the broad market as measured by the S&P 500 index is down 6.62%.
Short-Term Reversion to the Mean
U.S. Airways closed at $8.54 a share on Tuesday after reaching a high of 10.87 as recently as June 16th.
LLC is oversold within the framework of a bullish trend. Buy at 8.54 or better with a stop loss of 0.87 below the entry price. The target price is 10.28 (based on a 8.54 purchase price).
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