THIS ‘BOOM AND BUST’ SECTOR IS IN BOOM MODE
Today, we check in on one of the most volatile sectors in the market.
We’re talking about airlines. Because of their razor-thin profit margins, exposure to swings in fuel costs, and massive capital expenditures required to keep their businesses running, airlines typically make for poor long-term investments.
That’s what we’re seeing right now.
Consider shares of major airline Southwest Airlines (LUV).
The $37 billion company is the largest domestic airline, serving more than 100 million customers annually in more than 100 locations in the U.S.
Right now, low oil prices have helped push Southwest shares to their highest level in more than 30 years.
They’re up more than 160% over the last three years alone. While things are in boom mode for this airline stock, it’s important to remember that when it comes to airlines, “rent, don’t buy.”
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Source: Daily Wealth’s Market Notes