We recently compiled a list of the Top 10 Airline Stocks Benefiting From The Air Travel Boom. In this article, we are going to take a look at where Allegiant Travel Company (NASDAQ:ALGT) stands against the other airline stocks.

The aviation sector wasn’t short of optimism heading into the new year as air travel demand reached pre-covid highs and the holiday season showed promise. That optimism is now turning into reality as Delta Airlines announced its Q4 earnings result and surprised to the upside. The announcement has spurred a rally across airline stocks as expectations of other companies posting an earnings beat rise.

Delta reported improved operating margins of 12% vs 9.9% from a year ago. It improved the revenue per available seat mile from $0.1995 a year ago to $0.2004 in the last quarter. All of its international regions showed sequential improvement as revenue generated from international passengers grew at 6%. The company has also improved its guidance for the first quarter to $0.85 at the midpoint to the prior $0.76.

We now look at how this may affect other stocks across the industry.

A busy airport terminal with travelers passing through on their leisure travels.

Allegiant Travel Company (NASDAQ:ALGT)

Allegiant Travel isn’t the most sought-after airline stock. However, it had an interesting 2024. By August 2024, the stock was down as much as 50%. It has been on a crazy ride since, nearly tripling in a matter of 5 months. It is this uptrend that has helped the stock make it to our top 10 list.

When the stock was getting hammered last year, the company was reporting revenue and earnings beat. It was reducing its expenses and increasing asset efficiency, eventually resulting in improved profit margins. Even its credit card business, which the company operates in partnership with the Bank of America, showed a 34% YoY growth.

There’s a catch though. The income from the company’s credit card operations formed three-quarters of its total operating income. This shows how its airline business isn’t doing as well as it should and also explains why the stock didn’t perform well in the first half of last year. As travel demand returned, the stock faired better. If this demand continues, there’s no reason why the stock can’t continue its performance in 2025.

Overall ALGT ranks 6th on our list of the to airlines stocks benefiting from the air travel boom. While we acknowledge the potential of ALGT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as ALGT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article was originally published at Insider Monkey.