After flying high since November, airline stocks suddenly nose-dived on Tuesday. Southwest Airlines (LUV) dropped by nearly 15%. Even an upgrade from Argus Research failed to help the stock. Investors dumped the stock after the airline cut its guidance.
For Q1/2024, Southwest expects a modest 11% Y/Y rise in available seat miles. Fuel cost will rise to $2.95 - $3.00, compared to $2.70-$2.80 as previously forecast. It will lose money in the quarter but post a profit in March.
American Airlines (AAL) dropped by 4.71% for the same reasons. It expects higher fuel costs. As a result, it will lose between $0.15 and $0.35 a share.
Investors should consider avoiding tourism stocks even as the summer holiday is months away. Amid high inflation and lower disposable income, revenge traveling may lose momentum.
In the solar energy sector, Enphase (ENPH) needs to rebound from Tuesday’s ~ 6% loss. Bloomberg reported cancellations in planned U.S. solar factories. It cited the U.S. is unable to compete with China’s cheap imports. Federal subsidies are insufficient to sustain domestic plants.
Pfizer Bottomed
After a long downtrend, Pfizer (PFE) potentially bottomed at $25.61. Last trading at $28.01, the dividend yield falls to 5.92%. The firm posted positive results in its ongoing ECHELON-3 trial for a drug treating a lymphoma condition. Investors may consider holding its partner, Takeda Pharmaceutical (TAK).
