Atlantic Coast Airlines

Airline stocks have been flying higher recently due to speculation that the price of oil has topped out. As I recently wrote, I've increasingly been looking at the airline sector for some investment opportunities. One of the stocks catching my attention continues to be Atlantic Coast Airlines (ACAI).

ACAI is a classic value stock opportunity. The stock has been in a steady downtrend for some time as a combination of regulatory and growth issues inspired investors to disown the stock. In fact, the FAA just proposed to fine ACAI $1.5 million dollars for operating planes without performing required inspections. Still, it trades at four times earnings, 0.78 times book value and 0.32 times revenue. At some point you have to wonder whether the bad news is already baked into the stock price.

But, intrinsic value alone is not the only reason to give the company another look. In buying these stocks, I'm also looking for an upside catalyst as value stocks tend to stay cheap a lot longer than everyone expects. Nevertheless, one such catalyst may be found in the firm's new Independence unit. Although analysts don't necessary think this bodes well for ACAI, they've been wrong in the past. Chris Isidore at CNNMoney outlines the debate. READ