Investors remain concerned as inflation is running at its hottest since 1981, and as commodity prices have spiked higher, weighing on the overall economy. But no matter how good or bad the economy has been, individual companies that have been able to grow their earnings can thrive in any market.
That’s especially true when a company is in a space where poor performance in a weak economy is expected.
One such example is American Airlines (AAL). The company reported that its first-quarter revenues came in better-than-expected. The company’s revenues are still down 16 percent from the same quarter in 2019, indicating that things aren’t quite back to pre-pandemic levels for the airline.
Shares are down nearly 25 percent in the past year, and the airline isn’t quite profitable yet, even though revenue is now up 134 percent over the past year.
Action to take: The company seems on track to navigate the wild swings in fuel prices right now, a key make-or-break component for the airline industry. Investors can likely see a move higher in shares from here, although the stock doesn’t pay a dividend at the moment.
For traders, the August $30 calls, last going for about $1.25, offer mid-double-digit returns in the coming months, particularly if shares can rally off the latest news.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.