{"id":8335,"date":"2021-01-07T23:41:37","date_gmt":"2021-01-07T18:11:37","guid":{"rendered":"https:\/\/capitalante.com\/?p=8335"},"modified":"2021-01-07T23:41:37","modified_gmt":"2021-01-07T18:11:37","slug":"best-airlines-stocks-to-buy","status":"publish","type":"post","link":"https:\/\/capitalante.com\/best-airlines-stocks-to-buy\/","title":{"rendered":"7 Best Airlines Stocks to Buy for Long Term"},"content":{"rendered":"
The airline sector is a great addition to any investor\u2019s stock portfolio. Owing to the Covid-19, the airlines’ stocks are trading at an attractive valuation. By investing in quality airline stocks, you will get a fruitful return when you stay invested for the long run.<\/span><\/p>\n Before investing in airline stocks here are the 3 questions you should ask yourself.<\/span><\/p>\n <\/p>\n Before investing you should buy an insurance policy to tackle health emergencies. When you are insured you don\u2019t need to sell stocks that have in your portfolio when any medical emergency comes at your door.<\/span><\/p>\n <\/p>\n When you create an emergency fund that will cover all the household expenses namely, grocery bills, utility bills, and even Netflix subscription charges for the next six months, you may move to invest. If you have not prepared one then first of all create an emergency fund before making an investment.<\/span><\/p>\n <\/p>\n Don\u2019t invest solely in the airline sector. Instead, diversify your portfolio across 3 sectors when you are going to invest in 7 different stocks. This will minimize the risk profile.<\/span><\/p>\n After choosing the sectors where you wish to invest, you need to pick the best stocks for consistent returns. In order to pick the best stock, you should check out the following parameters of the company.<\/span><\/p>\n <\/p>\n Parameter #1. Revenue \u2013<\/span> <\/span>Revenue or net sales of a company should be constant for at least 5 years. You may check that the company has been generating sales growth annually during the last 5 financial years of at least 10%.<\/span><\/p>\n Parameter #2. Net Profit \u2013<\/span> The net profit of a company increases at least 15% on a year-on-year basis.<\/span><\/p>\n <\/p>\n Let\u2019s assume, a company has a net income of $ 10,000 per year. It Pays $5,000 in a preferred dividend to investors. It has 50 shares outstanding.<\/span><\/p>\n <\/a><\/p>\n It is a good idea to invest your money in those stocks that regularly pay a dividend and deliver a Healthy dividend payout. The stocks which have delivered healthy dividend-paying must have the following features<\/span><\/p>\n P\/E ratio should be as low as compared to the other peer companies active in the same industry.<\/span><\/p>\n Let\u2019s assume, a company has a net income of $10000 per year. It Pays $5000 in preferred dividends to investors. It has 50 shares outstanding.<\/span><\/p>\n <\/a><\/p>\n Now, if the stock currently trades at $1000, then<\/span><\/p>\n <\/a><\/p>\n You need to choose such stocks that have P\/E less than 9. But P\/E varies from sector to sector. Lower P\/E ratio of sectors does not mean that this sector is undervalued and is going to boom and deliver a multi-bagger return in the near future compared to that sector which has a higher P\/E ratio. These sectors have higher valuation just because the market is bullish on these sectors and their future potential like Automobile, FMCG, Petroleum, etc. They are the core sectors of the Indian economy and have the potential to deliver a robust performance in the upcoming years.<\/span><\/p>\n P\/B should be low as compared to the peer companies operating in the same industry.<\/span><\/p>\nAre your family insured?<\/span><\/h3>\n
Have you created an emergency fund?<\/span><\/h3>\n
Have you prepared an asset allocation strategy?<\/span><\/h3>\n
How to pick best Airlines stocks for a consistent return<\/span><\/h2>\n
Parameter #3. Healthy dividend payout and stable Earnings-per-share<\/span><\/h3>\n
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Parameter #4. Price to Earnings Ratio (P\/E)<\/span><\/h3>\n
Parameter #5. Price to Book Ratio (P\/B)<\/span><\/h3>\n