As the airline industry is constantly evolving, American Airlines seems to have carved out a niche for itself over the years. This post will be about American Airlines (AAL): Is This Airline Stock Still Grounded? From October 2018 the stock has been in a downtrend but lets look at the fundamental and technical analysis of the stock and see if that could change.
American Airlines (AAL): Is This Airline Stock Still Grounded? – Fundamentals
There are 7 fundamental markers I look for in a stock. I try to only purchase growth stocks so these are the parameters I look for to see if a stock meets the majority of the markers. I prefer to have all seven fulfilled. You can it more in depth here: https://evancarthey.com/how-to-scan-for-winning-stocks-an-insiders-view-to-my-process/
- Market Cap: > $300 million
- EPS growth past 5 years: >0%
- P/E: Over 10
- EPS growth next 5 years: >0%
- Sales growth past 5 years: Over 20%
- Debt/Equity: <0.1
- Sales growth qtr over qtr: Over 5%
Does the stock meet these 7 markers?
- Market Cap: 13.97B (YES)
- EPS growth past 5 years: 17.80% (YES)
- P/E: 10.12 (YES)
- EPS growth next 5 years: 14.47 (YES)
- Sales growth past 5 years: 10.70% (NO)
- Debt/Equity: N/A
- Sales growth qtr over qtr: 1.80% (NO)
I used Finviz.com for the fundamental analysis screener.
With American Airles only hitting 4 of the 7 growth markers I look for I cannot consider this to be a growth stock. The Debt/Equity was not available for some reason. The good news is at least all of the numbers were positive so that helps. But overall it does not have a high enough growth rate for the markers I look for in growth stocks.
Technical Analysis
In a new setup I am using the chart above shows the setup. The name of the setup is the Springboard Long Setup. We are waiting for price to hit the pink line, this will start the trade. When the price hits the pink line at $33.48 then the exit is the top of the green box at around $48.00. But if price retraces first, down to the 0% Fibonacci line which is the bottom of the teal box then the exit moves to the 38% Fibonacci retracement line at around $36.00. You can also go long at the 0% line as well.
If price continues to move lower and hits the 127% Fibonacci extension line then you would go long there as well. The exit would move to the 23.6% Fibonacci retracement line which is the top of the teal box around $33.00. This would be the last time you would move your exit even if price continued to go lower. But this only happens if the setup 1st gets initialized with the 23.6% Fib extension being hit. If the 127% Fib extension gets hit first then the trade is not valid. Here is how the entries and exits look:
- If 127% Fib extension level is hit (orange line) before 23.6% Fib extension line then the setup is not valid.
- But, if the 23.6% Fib extension level is hit 1st then the trade starts and the exit is the 100% Fib level at around $48.00.
- If price retraces and hits the 0% Fib level at around $29.00 then you go long there and move your exit to the 38% Fib retracement level around $36.00
- If price continues to retrace and hits the 127% Fib extension level then you can also go long there and your exit moves to the 23.6% Fib extension level around $36.00.
- If price continues to go lower then you can keep on getting in but your exit does not move from around the 23.6% Fib retracement level.
If an exit is hit then the move is over even if some of the retracement levels have not been initialized. The setup is over and time to look for a new one.
Conclusion for American Airlines (AAL): Is This Airline Stock Still Grounded?
Hopefully the technical side made sense. It is a new setup I discovered this weekend through more meditating. I really like it and have not seen it fail so far from all of the tests and setups I put it through. For the fundamental side the numbers in the markers I look for were all positive but some of them weren’t high enough to be considered a growth stock. There are a lot worse stocks to consider than this one so American Airlines may be one to keep your eye on.
Popular Links
Here are a couple of links if you are looking at how I view the market and some trade setups. You can create your own trading style and setups. Quit paying losing traders to teach you. The only thing they teach is how to lose money.
Robinhood Trading Broker Review
If this post benefits you and if you haven’t used Robinhood for trading stocks but are thinking to then please consider using my referral link when you do sign up: http://share.robinhood.com/evanc203.
This way each of us will receive a free share of a random stock if you sign up through my referral link.
My Robinhood Review: https://evancarthey.com/review-robinhood-trading-service-with-no-fees-part-1/
