U.S. Global Investors (NASDAQ:GROW). earlier this week provided insights into the airline industry, with CEO Frank Holmes explaining the sector's potential for growth.
Holmes told Proactive that the airline industry, represented through the JETS ETF, has seen a strong recovery from pandemic lows. The ETF rebounded from $11 to $28, and many companies are now reporting significant revenue growth.
Holmes pointed out that airline stocks remain deeply undervalued. He noted that United Airlines, which recently announced a substantial stock buyback, saw a 12% surge in its stock price in a single day. This buyback is part of what Holmes referred to as "total shareholder yield," which includes paying down debt, increasing dividends, and repurchasing shares.
Despite fears of an economic recession, Holmes argued that no slowdown is visible in airline bookings, with no discounts available for flights even a year out.
Additionally, Holmes discussed the impact of activist investor Elliott Management’s involvement in Southwest Airlines. Elliott Management’s acquisition of an 11% stake in Southwest is seen as a strategic move to unlock value in the airline.
"The industry is really poised from both a revenue and a cash flow point of view,” Holmes said. He highlighted that the JETS ETF holds positions in international airlines and airports, providing broader exposure to the aviation sector.
The ETF includes stakes in airports like Paris de Gaulle, Bangkok, and Beijing, which operate in a private equity-like manner.
Quotes have been lightly edited for style and clarity