Remember my post two months ago where I meandered about whether to sell my United Airlines stock?
The stock had risen three-fold since I had invested in July and although I had an inkling that the stock would continue to rise (see my commentary in the link above), I decided to take the conservative route and sell. I pocketed a nice profit, but I have to admit I’m feeling rather sad today.
The headline today is UAL Buoys U.S. Airlines After ‘Blowout’ Revenue Data:
United Airlines parent UAL Corp. surged the most since September in Nasdaq trading, helping buoy the rest of the large U.S. carriers, after reporting so-called unit revenue that beat analysts’ estimates.
“This changes our industry view,” Jamie Baker, a JPMorgan Chase & Co. analyst in New York, said in a note to investors. United said yesterday that January passenger revenue for each seat flown a mile on its main jet operations and regional flights rose as much as 11.5 percent. Baker had estimated a gain of 3 percent to 5 percent.
Investors and analysts track unit revenue as an indicator of industry health. U.S. carriers have been struggling to boost fares because the recession has damped demand, especially among business travelers who typically pay the highest prices.
UAL jumped $1.99, or 15 percent, to $15.06 at 12:26 p.m. New York time in Nasdaq Stock Market trading. The shares advanced as much as 16 percent, the biggest intraday gain since Sept. 10. United is the third-biggest U.S. airline by traffic…
Did you catch that last paragraph? UAUA is now above $15.00/share and climbing.
A three-fold return on my investment was nice. A five-fold return would have been much nicer.
So I know many will disagree with me, but when it comes to airline stocks: I say make your decisions based on your emotions rather than on cold-hard numbers–especially if you fly the airline almost as much the FAs and pilots do. Rational thinking cost me thousands in potential gains!
Results driven rationalization never works in the long run. UA’s stock has dipped from a few dollars to upwards of 40 or more in the past ten years – over and over again. You simply need patience to wait for the next downturn or short the stock when it reaches unmaintainable levels as it is bound to do.
There is still an overcapacity of airlines and seats, airlines are still losing money, and we are still in the middle of a recession. All we need is another oil speculation blowout, alligator flu (or some other animal!), or other problem to send investors scrambling. If this happens to be the run that sends UA to $40 there is not much you can do except understand that you made the best choice at the time.
Be happy with a smart decision to buy low and take the profit you did. You will be able to make a similar decision within the next two years I am sure.
United Continental holdings’ stock is back down to $16 today from a high of $29. I would guess this week it will dip even further.
AMR, parent of American Airlines, is down to $3.43 with a market cap of only $1.1 Billion.
What’s your plan, wait out this week and re-invest in UA? Or just buy AMR outright when it gets to $900 million? 😉
I’m actually leaning toward a $10K investment, perhaps split evenly, just to see if I can make a little extra money again. I am worried about AMR, though…
Thanks for the reminder, BTW. I forgot about the money I have sitting in my Ameritrade account!