Is American Airlines Stock A Solid Long Term Investment?

American Airlines

The financial market is one of the areas you can invest if you want to amplify your funds. It focuses on the purchase and sale of company stocks among many other securities such as commodities, indices and currency pairs. Focusing on company stocks, you need to get a stable company for a solid investment plan, where there is minimal risk of losses. Among the established companies to look at is American Airlines. According to its Wikipedia page, it is one of the biggest companies in terms of fleet size, passenger number and revenue passenger mile. Looking at its stocks, do they make a solid ling term investment plan? A focus on its background will provide level ground for analysis to see if American Airlines shares are a worthy investment front.

American Airlines Background

American Airlines came to be in 1930, as a result of the union of over eighty small airline companies. Its two parent organizations were Robertson Aircraft Corporation and Colonial Air Transport with the merger of these two companies birthing The Aviation Corporation. The same year, the company got a name change that resulted in one of the best performing brands in the aviation industry, American Airlines. Over the years, the company grew tremendously with its Golden ages being between the 1970s and 2000s. During this period, the company acquired other companies via mergers and also expanded its destinations and fleet. A turning point came in2001 when one of its planes got involved in the infamous September 11th terror attack. Earlier in 2001, it had announced plans to acquire Trans World Airline’s asset. Later as the year folded it merged with America West, another major airline in the United States. In 2013 the merger of American Airlines, AMR Corporation and US Airways Group was concluded and resulted in the formation of the American Airlines Group, which acts as the aviator’s parent company. Currently, the company trades on the NASDAQ stock exchange.

The Current Performance In The Stock Market

Before you pick an instrument to trade on in the financial markets, you need to look at its return to have a clear projection of its future price movement. It is a part of technical analysis, which is essential for a long term investment plan. At the moment, the stock prices of American Airlines are at a dip just like many other companies. There is an ongoing economic recession with fingers pointing at the COVID-19 pandemic. Considering that there are travel bans, especially from international territories, aviation firms will be among the most hit. According to Market Watch, the aviator’s stocks are trading at $12 per unit as of March 29th, 2020. That is a massive dip from the $30 per unit mark in February 2020. In mid-March 2020, it had gone to lows of $10, as such it is appreciating, though at a slow rate. One thing that you may note when you look at its performance in March is that it is gaining stability and not as volatile as in previous months. The semblance of stability is a factor to look at when you want to make long term investments as you can easily project the price movement of the securities you buy.

Its Reputation In The Market

American Airlines has been in the industry for long and recently celebrated its 90th anniversary. Being in the scene for such a long time is a show of resiliency, and not many firms can demonstrate such. Its longevity gives it a good name among investors and creates a significant market for its shares. As an investor, this is a good thing as you can quickly sell your stocks when need be without much hassle.

Competitors

When doing the fundamental analysis of this company, you need to look at its competitors and how strong they are. At the moment, the aviation company is at the best of its game, a boost it received after merging with US Airlines, a large aviation company and AMR Corporation to form the American Airlines Group. It is currently one of the largest airlines in the world, and despite fierce competition, it remains atop of the pack.

Direction To Combat The Situation

As earlier hinted, there is currently a recession with several companies performing poorly at the stock market. Several of these firms have come up with plans to help them recover once the market gets back to normalcy. The airline firm is among these companies and is designing a plan to help it to its feet, when you look at its shares. According to Seeking Alpha, the company is holding talks of hiring Guggenheim Securities’ co-chair, James Millstein. His role will be to help in decision making when it comes to asking the government for a bailout through loans or cash grants American Airline has not yet decided on how to go about with government aid plans. However, as an investor, you need to take note of the effort the company is making to remain afloat. You can also take advantage of the situation and buy its shares in bulk. Later on, after the recession, you may sell the shares at a significant profit. You may also go short on the stocks if you have a legitimate broker and a ready market. Learn more about short trading from Investopedia.

Final Thoughts

The stock market is one front to look at if you want to invest. There are many companies listed, and you need to pick a reliable one to avert losses. American Airlines is one of the best performers in the aviation sector. You can buy into its securities if you are looking for a long term investment plan. It has been around for 90 years and is going strong by the day. Despite the dipped performance, speculations point to its bullish run once the economic slowdown recedes.



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