The coronavirus pandemic proved to be disastrous for a range of business but no sector bore the brunt as much as the airline sector. Many of the airline stocks experienced steep declines in 2020 but over the course of the past five trading days, American Airlines Group Inc (NASDAQ:AAL) stock seems to have caught the fancy of investors. The stock has rallied by as much as 16% during the period and it could be worthwhile to figure out whether it is going to be worth investing in or not. Here is a closer look at it.
Factors to Watch
First and foremost, it should be noted that according to historical patterns, the American Airlines stock often corrects after such moves. According to analysts from a leading financial magazine, the stock could correct at some point next month but over the next 6 months or so, the American Airlines stock could generate returns of as much as 15%.
The coronavirus pandemic had resulted in deep declines in many airline stocks and a gradual recovery over the next six months could help the stocks in fashioning a turnaround. In addition to that, investors need to note that a coronavirus vaccine could be available soon and once that happens, travel will also increase to near-normal levels.
The report further pointed out some important facts and figures that could be vital information for any investors. At the beginning of 2020, the American Airlines stock commanded a price to sales ratio of .28. However, after the latest rally in the stock, the ratio stands at .33, which represents a jump of 18%. This is significant. It indicates that although the company’s revenues have declined sharply, the market actually values the stock more at this point.
On top of that, it is necessary to point out that other airlines’ stocks like that of Alaska Air Group and JetBlue Airways are trading at price to sales ratio of 2.22 and 2.76 respectively. American Airlines is available at a significantly cheaper level and available at a bit of a bargain. Hence, it could be argued that investors might consider keeping an eye on the stock.