Is UAL Stock a Solid Long Term Investment?

United Airlines

If you’re looking for a solid stock to use as a long-term investment, you might be brainstorming different companies as you try to come up with one that you think would be a suitable option. It’s entirely possible that throughout that brainstorming session, you considered United Airlines, traded as UAL. That said, there are a lot of things that you need to consider when thinking about this or any other stock. Just because the company has been in business for decades doesn’t necessarily mean that they’re a good option, especially not as a long-term investment. Unfortunately, the circumstances surrounding this particular stock can be somewhat complicated. Therefore, it’s going to take a bit of time to unpack it all so that you can make an educated decision about whether or not you should get involved with this particular option.

How Is The Stock Performing Today?

If you look at today’s stock market information, you’ll notice that United Airlines stock is currently being traded for $42.34 per share. As a matter of fact, it’s up by 3.65% today. Paying more than $40 for a single share isn’t exactly ideal when you’re trying to make money on a long-term stock option, but there are stocks available for sale that cost a lot more and end up being a good decision. The fact that it’s worth more money today than it was yesterday is something that encourages some investors because they see it going up at a time that the stock market is very volatile and virtually everything else seems to be going down. However, it’s easy to be misled if these are the only things that you’re looking at. As a matter of fact, it’s practically impossible to decide whether or not any stock is a good long-term investment option if the only thing you are looking at is the cost of shares in current trading. The same is true regarding whether or not that particular stock is up or down for a single day. Even if you’re essentially brand new to the stock market, you know that it’s imperative that you look at the history of any stock that you’re considering purchasing. Only then can you get a more complete idea of whether or not any particular stock that you’re considering purchasing is a potentially good investment. In addition, there are some other things associated with this particular stock that need to be looked at closely before you make a decision.

Stocks Are Graded, Too

One of the things that you might want to look at is the grade that this (or any other stock you’re considering purchasing) gets from some stock market analysts. Unfortunately, the grades for this particular stock are not that good. As a matter of fact, United Airlines has received a D when it comes to their potential to hold their value for any significant length of time. Worse yet, they also received an F with regard to the way that they conduct their business in terms of their financial status. These aren’t exactly positive ratings. As a matter of fact, it should be enough to make any potential investor decide to think twice before spending a significant amount of money. When you consider the fact that you can’t purchase a single share of the stock for less than $42, it becomes evident fairly quickly that you’re not going to be able to purchase enough shares to make any headway as a long-term investment unless you spend a great deal of money in the process. The problem is, there is no guarantee that the stock is actually going to go up. Even if it does, there is still no guarantee that it will go up enough for it to become an effective long-term option. Does that mean that you should stop looking right there and move on to the next thing? Of course not. When it comes to the stock market, it’s always important that you take a closer look at everything. The first rule of thumb that you need to remember is that nothing is as simple as it seems when stocks are involved. As a result, it’s imperative that you look at everything slowly and methodically. Otherwise, you run the risk of missing something that could be very important.

Why Is The Stock So Volatile?

There are a couple of different reasons why this stock is extremely volatile, apart from the fact that the stock market is reactive to world events that are currently causing virtually the entire thing to be more volatile than usual. As you might have already guessed, the volatility of the United Airlines stock centers almost exclusively around the coronavirus and whether or not it will continue to be safe for people to travel. At the moment, people don’t really know what to make of everything they’re hearing in the news. On one hand, it seems like you have people telling you that it’s safe to travel as long as you’re vaccinated and boosted. Many places are even scrapping virtually all safety precautions and throwing the doors wide open to welcome travel all over the world. On the other hand, you have a situation where simply listening to the nightly news can complicate matters. It certainly doesn’t help when you start hearing stories about new variants of the disease and people getting sick two and three times over, even when they have been fully vaccinated. When you couple this issue with world events centering around Ukraine and Russia, it’s a little easier to understand why some people might be hesitant to travel in any capacity. Obviously, that’s something that is going to have an impact on this particular stock. Because of the very nature of its business, stock for United Airlines and every other company like it is impacted more heavily by these types of things than a lot of other types of businesses. That in turn can make the stock extremely volatile. In reality, it can be doing great one day and then completely fall apart the next day, based simply on things that the airline has absolutely no control over whatsoever. That alone makes it very difficult for anyone to accurately predict what’s actually going to happen and whether or not people will be able to travel safely in the relatively near future. Granted, you could potentially make the argument that it shouldn’t have an impact on the way people look at the stock for a long-term option, as people have traditionally thought that these types of issues would be resolved within a matter of months. Unfortunately, the pandemic has proven that this is not always the case. As such, people are a lot more worried about investing in anything for the long-term because it’s painfully obvious that these issues can go on for years and years.

Signs Of Recovery?

The thing that really makes it complicated with regard to this particular stock is that while everything said in the above paragraph is a valid argument, you also have the knowledge that United Airlines recently placed an order for approximately 270 more aircraft in order to meet the expected demand for additional travel in the relatively near future. That fact alone gives some investors hope. It also doesn’t hurt that the airline industry as a whole has actually exceeded initial expectations when it comes to recovering from all the damage done from the pandemic. However, things are still quite precarious. As a matter of fact, it wouldn’t take much of anything to take things back to the way they were at the height of the pandemic. That is precisely what has some analysts worried. It’s also what prevents some investors from choosing this particular stock in any capacity, especially as a long-term investment.

Signs Of Warning?

It doesn’t help that United Airlines themselves seems to be issuing a warning about their potential earnings for the next quarter. As a matter of fact, they have been telling all of their investors (rather loudly) that they expect to see a drop in their revenue of as much as 33% during the next quarter. The reason for this is because of yet another spike in covid cases. This causes a lot of stock market analysts to ask an important question. Is it possible that the airline industry will never be quite the same again as it was before the pandemic started? Every time that a new variant comes along or there is a spike in cases, airline executives start talking about losing revenue. Considering the fact that it seems that there is no real end to covid in sight, this is something that could potentially go on for years and years. Do new investors really want to risk spending their money on something that’s so volatile that it can lose one third of its value simply because a new variant comes along? It also forces those who are interested in investing in the stock of a long-term option to face an important question. If the airline industry is going to be this reactive to everything that happens with regard to covid, is there the potential that no airline’s stock would be a good long-term investment? Investors have to accept the possibility that things are as good as they’re going to get for the foreseeable future with regard to this particular industry and they also have to accept the fact that all of this can change at the drop of a hat. If that’s the case, it doesn’t seem like any stock of this type would be a good long-term investment because it’s virtually impossible to predict with any level of accuracy how things are going to go in the next few weeks, much less the next two or three years.

Issues Not Related To Covid

Of course, there are also some issues that aren’t related to covid that have investors wondering whether or not it would be better to leave this stock alone entirely. As previously mentioned, the airline just ordered several aircraft. That means a lot of money is being spent, something that always makes investors nervous. By the same token, the company is taking a number of steps to make their operations more environmentally friendly. That’s a good thing, but it also means that a lot of money is being spent. Last but certainly not least, they’re hiring more people to help them meet the anticipated demand for increased business that hasn’t even happened yet. All of these things come together to make investors wonder whether or not the airline is spending far too much money, not to mention overestimating potential profits for the next several quarters. As everyone knows, any company that spends a lot of money can make investors nervous and that typically means that they start selling off shares. When that happens, the price tends to drop and things can potentially spiral out of control. Anyone considering investing in the stock as a long-term option has two main points that they need to recognize here. If a lot of people start selling off stock, the obvious drop in price could mean that it is possible to get the stock for a lot less than it is selling for today. Provided it goes back up in the long-term, that could be a good thing. However, if it spirals out of control, that doesn’t leave a lot of options for anyone when they are trying to use it as a long-term investment. As a potential investor, you have to decide which way you think it’s going to go and then make your decision accordingly.

At the end of the day, only you can decide if this is a good long-term investment option or not. Although stranger things have happened, it’s not terribly likely that United Airlines is going to cease operations within the next year or two. At the moment, nothing seems to point to the slightest suggestion of such a thing happening. That being said, this may not necessarily be your best option for a long-term investment. The stock market itself is volatile at the moment and this particular stock is even more so. If you’re looking for something solid, you’d probably be a lot better off to pass this one up and look at something that doesn’t have so many factors that could potentially impact it in a major way.

Similar Posts

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.