This airline’s Shares are up Over 60% in Just 6 Weeks

What if I told you there’s a domestic airline whose shares are up over 60% in just 6 weeks time? And up 11% just this past Monday?

It’s not Southwest (NYSE:LUV), or Delta (NYSE:DAL), US Air (NYSE:LCC), or any of the other anemic majors. No. Chances are, you’ve never heard of Allegiant Travel Company (Nasdaq: ALGT), more commonly known as Allegiant Air.

Allegiant’s business model is focused on ferrying travelers to around 75 small cities and popular vacation destinations, such as Las Vegas, Orlando, Fort Lauderdale, San Diego and Myrtle Beach.

In addition to remarkably low fares, all of Allegiant’s flights are non-stops, getting passengers to their destinations much faster that it’s connection-prone competitors.

Allegiant partners with hotels, rental car companies and resort parks. Its total package pricing provides great value to individuals and families looking for one stop vacation shopping. It’s fleet of aircraft consists solely of McDonnell-Douglass MD-80 aircraft, giving them a leg up in terms of fuel efficiency.

So why all the hoopla concerning the company’s shares? One word: earnings. Something that’s routinely been missing from most airlines’ balance sheets.

In Allegiant’s case, earnings are expected to double from those reported a year ago, and the company’s shares have already jumped over 100% from this point last year.

This rather pleasant scenario is about to play out among the rather ugly numbers expected from most of the other airlines, many of whom will be reporting their quarterly results this week and next.

So how has it managed to do it? A 15% jump in passengers and a 13% rise in passenger revenue miles for starters. Also, its load factor – a key industry benchmark measuring the number of seats filled – increased from 86.9% to 90.8% during the last quarter.

Helane Becker — Jesup and Lamont’s airline analyst – expects Allegiant to chalk up a 20% operating margin for the quarter: “In this period of time, nobody else is going to come close to that operating margin, and that’s got the shorts a little bit spooked.”

When earnings are announced next week, shares could indeed pull back from their recent highs. However with strong fundamentals and customers beginning to dips their toes back into the travel tub, Allegiant is one airline that will be taking off with increasing frequency… along with its shares.

Good Investing,

- by David Fessler, Advisory Panelist