Southwest Airlines Is Top S&P 500 Stock

For June, we see a 50% turnover in our list. Traveler's has finally been dethroned from its longtime top spot by newcomer Southwest Airlines. DR Horton, Chubb, and AT&T also declined a few positions. Poultry giant Tyson has moved up while AIZ, AFL, HIG, AVGO, and KLAC have fallen out of the top-ten list. Other newcomers this week include Delta Airlines, Global Payments, UNUM Group, and First Solar.

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Below is today's data on our new SP500 leader, Southwest Airlines (LUV):

Southwest Airlines is a major domestic airline that provides primarily shorthaul, high-frequency, point-to-point, low-fare service. Southwest operates over Boeing 737 aircraft in numerous cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest fares. Southwest also has one of the best overall Customer Service records.

Recommendation: We continue with a STRONG BUY recommendation on SOUTHWEST AIR for 2016-06-01. Based on the information we have gathered and our resulting research, we feel that SOUTHWEST AIR has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	43.07	1.25%
3-Month	43.40	2.02%
6-Month	43.22	1.60%
1-Year	48.96	15.08%
2-Year	41.64	-2.12%
3-Year	32.48	-23.65%

Valuation & Rankings
Valuation	12.64% undervalued	Valuation Rank	70
1-M Forecast Return	1.25%	1-M Forecast Return Rank	100
12-M Return	12.39%	Momentum Rank	81
Sharpe Ratio	0.92	Sharpe Ratio Rank	96
5-Y Avg Annual Return	25.57%	5-Y Avg Annual Rtn Rank	96
Volatility	27.81%	Volatility Rank	62
Expected EPS Growth	8.38%	EPS Growth Rank	39
Market Cap (billions)	28.87	Size Rank	97
Trailing P/E Ratio	10.92	Trailing P/E Rank	88
Forward P/E Ratio	10.07	Forward P/E Ratio Rank	80
PEG Ratio	1.30	PEG Ratio Rank	35
Price/Sales	1.43	Price/Sales Rank	55
Market/Book	4.42	Market/Book Rank	27
Beta	1.02	Beta Rank	44
Alpha	0.14	Alpha Rank	83

Market Overview

Summary of VE Stock Universe
Stocks Undervalued	52.65%
Stocks Overvalued	47.35%
Stocks Undervalued by 20%	22.79%
Stocks Overvalued by 20%	14.93%

Sector Overview

Sector	Change	MTD	YTD	Valuation	Last 12-MReturn	P/E Ratio
Consumer Staples	0.62%	0.65%	5.55%	6.34% overvalued	2.75%	23.55
Utilities	-0.15%	-0.10%	5.88%	5.53% overvalued	-1.07%	22.91
Oils-Energy	0.46%	0.57%	11.76%	4.85% overvalued	-33.49%	23.77
Multi-Sector Conglomerates	0.01%	0.05%	4.53%	4.68% overvalued	-10.33%	18.05
Basic Materials	-0.15%	-0.12%	26.37%	4.52% overvalued	8.74%	29.33
Industrial Products	0.24%	0.28%	6.05%	2.90% overvalued	-10.12%	21.49
Aerospace	0.19%	0.25%	-2.19%	1.04% overvalued	-4.84%	18.75
Computer and Technology	0.31%	0.39%	7.66%	0.25% overvalued	-8.92%	27.89
Business Services	0.40%	0.46%	11.99%	0.55% undervalued	-8.49%	22.99
Finance	0.15%	0.19%	2.41%	0.90% undervalued	-4.84%	16.00
Consumer Discretionary	0.38%	0.42%	2.93%	1.34% undervalued	-10.90%	22.67
Construction	-0.20%	-0.15%	20.93%	2.03% undervalued	-4.46%	20.52
Medical	0.68%	0.79%	-4.65%	3.59% undervalued	-19.52%	27.12
Auto-Tires-Trucks	-0.30%	-0.27%	-0.53%	8.15% undervalued	-17.51%	11.90
Transportation	-0.20%	-0.16%	1.60%	8.80% undervalued	-28.23%	13.62
Retail-Wholesale	0.23%	0.29%	-3.38%	11.04% undervalued	-11.71%	21.97

Valuation Watch: Overvalued stocks now make up 47.35% of our stocks assigned a valuation and 13.6% of those equities are calculated to be overvalued by 20% or more. Eight sectors are calculated to be overvalued.