The Best Airline Stocks

As the price of oil jumps around on the day-to-day headlines, for the most part I continue to hear that the majority believes that oil is topping out at these levels. As a contrarian, this is not what I like to see. I'd rather hear about people planning for $50 per barrel rather than $30 per barrel a few months from now.

Nevertheless, traders who are trying to anticipate a trend reversal in prices are speculating in the airline stocks. I've been looking into the sector as well, for both long and short positions. In general, I've made much more money shorting airline stocks than being on the long side. For example, on January 14th, I closed out a short position in my trading portfolio in Jetblue (JBLU) for a profit of $19,250. Whereas I've lost money being long in stocks like US Airways (UAIR).

Still, if you're looking to join the herd and speculate in this sector, my screens suggest that your focus should be on the following stocks: Atlantic Coast Airlines (ACAI), Airtran (AAI), Cathay Pacific Airways (CPCAY), Expressjet (XJT), and Southwest Airlines (LUV). These are the best of the bunch in terms of fundamentals and technicals. I'm still not playing on the long side, but if we get a confirmed break in the price of oil, I'd be looking at each much more closely.