Miami, FL - December 18, 2012 (www.investorideas.com newswire) EmergingGrowth.com, a leading digital financial media company, Reports on Allegiant Travel (NASDAQ: ALGT), Alaska Air (NYSE: ALK) and US Airways (NYSE: LCC).
Allegiant Travel (NASDAQ: ALGT) is flying high right now. The American company operates a low-cost airline whose niche focus is on transporting travelers from small cities to leisure destinations around the United States. Allegiant Travel share prices have moved between a 52-week high of $76.21 and a 52-week low of $47.32 and are now trading at almost 60% above that low price at $74.02 per share. It is one of three companies in the Airlines industry with the highest year-over-year expected earnings per share growth rates. The other two are Alaska Air Group (NYSE: ALK) with EPS growth of 36.7% and US Airways Group (NYSE: LCC), with EPS growth of 25.8%.
How They Do It
As well as providing amazingly low fares, all of Allegiant's flights are non-stop. This gets travelers to destinations a great deal faster than its rivals. Allegiant teams up with hotels, rental car companies and resort parks in order to provide low-cost package deals. Its fleet of aircraft consists solely of McDonnell-Douglass MD-80 aircraft, putting them ahead of the game in terms of fuel efficiency.
Allegiant also has the advantage of vertical integration. The airline was the brain-child of a travel company so customers can secure lodgings, rent a car, and even get hold of event tickets, at the same time they're making flight reservations. This generates more secondary revenue, which, in turn, adds nicely to the bottom line. Allegiant has the capability of employing an adaptable flight schedule since its client base is comparatively small and the travel seasons of its customers are, by and large, foreseeable. Depending on business, Allegiant has the ability to add or cut flight routes. The company has become a master at utilizing its flight schedule flexibility to alleviate losses during times of financial difficulty and boost profits during periods of economic prosperity. That's a knack that no big airline has been able to make use of to their advantage.
Allegiant's earnings are expected to grow twofold from those the company reported last year. Shares have already jumped over 100% year-over-year. A 15% jump in travelers and a 13% increase in customer revenue doesn't hurt either. Also, its load factor, an industry yardstick measuring the number of seats filled, jumped from 86.9% to 90.8% during the last quarter. Experts note that no one else will come close and that has the shorts just a tad jittery.
The numbers are encouraging. Allegiant has a potential upside of over 6% based on a current level of $74.02 and analysts' average consensus price target of $79.54. The stock ought to find early support at its 50 day moving average of $69.14 and additional backing at its 200-day moving average of $63.94.
The airline industry is so flooded with competitors that offer barely distinguishable services that it's challenging for companies to make their own niche. In addition, investing in the industry is a notoriously hostile gamble, but Allegiant is one of the top airlines in the industry. It accommodates a specialized clientele of air travel, it utilizes excellent business strategies and the numbers prove excellent financial strategies. Allegiant definitely has long-term potential.
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