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Could Airline Stocks Be a Bargain Play amid COVID-19 Pandemic?

from ETF Trends March 18, 2020

Globally, airlines have taken big hits due to the coronavirus hampering travel demand and forcing carriers to cancel flights. Some are comparing the impact on airlines to the effect of the September 11 attacks when global travel plummeted, but then recovered. However, unlike 2001, airlines are in a much better place in terms of profitability now. Al Root for Barron’s writes, “after all, today the sector is more consolidated and profitable. And debt compared with earnings for the sector is in line with other industrial companies.”

With hopes that the transportation and travel sector will rebound after the coronavirus is contained, now could be a buying opportunity for stocks negatively impacted by the global health outbreak. The U.S. Global Jets ETF (JETS) invests in the global airline industry of passenger carriers, aircraft manufactures, terminal services and more. ETF Trends reports that JETS was down 35.9 percent over the past month as of March 12, but has recently seen record trading volume and an increase in net assets.

U.S. Global Investors CEO Frank Holmes said in a note that “airline stocks right now are the most oversold since September 2001,” and accumulating airline shares now appears to be a strategic move to capitalize on lower fuel costs, in addition to the pandemic selloff.

Learn more about JETS and how it can provide global exposure to the airline industry.

U.S. Global Investors has authored and is responsible for the summary on this page. All opinions expressed and data provided are subject to change without notice. Opinions are not guaranteed and should not be considered investment advice. ETF Trends publisher Tom Lydon is on the board of U.S. Global Investors.

Past performance does not guarantee future results. Please click here for standardized performance.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. The expense ratio is 0.60%.

The outbreak of the COVID-19 pandemic and the resulting actions to control or slow the spread has had a significant detrimental effect on the global and domestic economies, financial markets and industries, including airlines. U.S. Global Investors continues to monitor the impact of COVID-19, but it is too early to determine the full impact this virus may have on commercial aviation. Should this emerging macro-economic risk continue for an extended period, there could be an adverse material financial impact to the U.S. Global Jets ETF.