United Airlines, trading at 52-week highs, is today's IBD 50 Stocks To Watch pick. Ambitious expansion plans and a record of high revenue gains support this growth stock.
UAL stock is in a buy zone from a 53.36 buy point after clearing a flat base a few days ago.
The stock had a five-day win streak before breaking out of its base. On Tuesday, BNP Paribas upgraded the stock to outperform from underperform with a 70 price target. UAL stock rose nearly 3% in strong volume after the news.
The growth stock has an unbroken record of sales growth over the past seven quarters, although earnings growth has been uneven. As a result, UAL has a less than ideal EPS Rating of 78.
In the fourth quarter, sales of $12.4 billion grew 51% while earnings of $2.46 per share showed a reversal from a loss a year ago. Its three-year sales growth rate is 7%.
The stock has a perfect Composite Rating of 99 and a strong Relative Strength Rating of 94, according to IBD MarketSmith.
UAL ranks first in IBD's airlines group, which holds 50th place among IBD's 197 industry groups. The airline giant serves North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America.
The airlines group boasts other leaders such as Delta Air Lines, American Airlines and Ryanair. The group has been leading the market thanks to strong travel demand and falling fuel prices.
Growth Stock Has Expansion Plans
UAL has huge expansion plans. In December, UAL made a historic purchase of 200 new 787 Dreamliners from Boeing. That included a firm order of 100 planes with the option to buy another 100. United shares fell on the news, but later recovered.
The purchase is the biggest widebody jetliner deal in aviation history. United expects to buy a total 700 new narrow and widebody aircraft by 2032 that will replace older planes and expand its fleet.
The new purchase will replace aging Boeing 767 and Boeing 777 planes. United plans on removing all 767s from its fleet by 2030, and expects the move to reduce carbon emissions by 25% per seat. United also plans to update its mainline narrow body fleet by 2025.
Mutual funds own 45% of the company's shares outstanding. More fund managers have been buying the stock over the past four quarters, giving the growth stock an impressive Accumulation/Distribution Rating of A-.
Exchange traded funds are in the stock as well. The U.S. Global Jets ETF and the Invesco Dynamic Market ETF hold shares of United Airlines.
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