LUV

[David Randolph]

The airline sector is turning bullish and Southwest Airlines is the strongest in its sector. It is profitable, and with the oil prices probably coming down over the coming months I see LUV as a buying opportunity here. Many competitors have been thrown out of the market on the recent downturn, so I see a rosy picture for the survivors:

- Pricing power and revenue growth combined with cost cuts due to the expected fall in oil prices.

The market agrees with me, so I'm buying LUV at today's open for the 3 Stocks on Fire Portfolio.

[Michael]

Interesting choice!

I wouldn't dream of buying into the airline sector. Too many competitors under chapter 11 protection basically competing unfairly. But Southwest Airlines is the strongest pick if you love the sector.

[David Randolph]

Interesting choice!

I wouldn't dream of buying into the airline sector. Too many competitors under chapter 11 protection basically competing unfairly. But Southwest Airlines is the strongest pick if you love the sector.

Thanks for your input on the airline sector Michael 

LUV came down a bit yesterday, while crude oil rose because of Hurricane Wilma. But reports now say it is just a Tropical Storm and it is headed to Florida, not Texas where the big oil refineries are. Anyway, these are just short term developments that just help putting the public long on oil future contracts and oil related stocks.

I believe oil will come down hard and the airline sector is the most obvious beneficiary.

I will continue holding LUV and will look for other plays on that sector.

[snowcat]

Oil prices are stil up a third from last year and airline competition has been fierce.  Mind you, LUV is basically "Trailways with wings"  and people are still going to need to fly and packages are still going to need to be shipped, but unless they are going to expand to lots of new routes, is this really a growth business?  Or are you just following the upward trend.

Earnings are Oct. 20.  I would not hold thru them.  I do not expect them to be pretty.

[puenthouse]

Is DAL- delta now a new symbol due to its worth in pennies, anyways is this sucker sunk, or at .62 make a bargin if airlines go up as a whole as oil drops?  Not real sure of the Bankrupt deal it has. 

[David Randolph]

Well, maybe you guys are right, I see a lot of resistance ahead for LUV on the long term chart. With the earnings release on Thursday there's potentially some not negligible risk. Not much upside and considerable risk tells me I should get out with a small loss of less than 2%.

That's the way it goes, I don't mind losing, if the loss is small. I understand that as the normal risk of the speculation business. But I hate big losses. So I take them when they're small.

I'll be selling LUV at tomorrow's open, not confortable with the position, will look for better plays.