5 Reasons Airline Stocks Could Be A Buy In 2021

5 reasons bullish on airline stocks february 2021

There’s no doubt 2020 was a rough 12 months for airline stocks. The NYSE Arca Global Airlines Index lost more than 31% over the course of the year as several major carriers reported record losses.

From a value investor’s perspective, this means the industry is on sale at a deep discount. Commercial aviation still has some challenging times ahead of it, but I believe the worst is behind us, meaning now may be an opportune time to get exposure.

Below are five reasons why I think airline stocks could be a buy in 2021. 

1. Globally, new virus cases are starting to roll over.

Worldwide, new daily cases of infection appear to be declining, according to data from John Hopkins University. From its peak in January, the seven-day rate has slowed to its lowest level since early November. In the U.S., the number of total daily hospitalizations has also been falling pretty steadily since early January.

daily new confirmed COVID cases worldwide are rolling over in February 2021

Not every country’s cases are dropping, though. Hotspots include Southern and Central Europe—particularly Portugal, Spain and Italy—and South America.

New variants of COVID-19 are also concerning and could contribute to a longer delay in the airline industry’s recovery.

The good news is that the vaccines already being distributed so far appear to work against the mutations.

2. Vaccine distribution in the U.S. is about to ramp up.

I was fortunate enough to receive my first dose of the vaccine last month—I shared my experience with Kitco’s David Lin, which you can watch here—but too many Americans have hit roadblocks trying to get theirs.

That may be set to change in the coming weeks and months. The Biden administration said recently that it would be sending a minimum of 10.5 million doses of the vaccine per week for the next three weeks across of the U.S. Starting next week, many of these doses will be going directly to pharmacies such as CVS and Walgreens.

The hope is that by the end of summer, 300 million Americans will have been fully vaccinated against the virus. As of Monday, some 26.5 million people had already gotten their shots, so I believe this goal, while ambitious, is achievable.

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