Monday, December 27, 2010

US Airways Group a Hold or a Sell?

A regular visitor to my blog and now a friend ask me whether it is a sell or hold for US Airways Group (LCC). She has bought it at $10.42 and now is trading at $9.90. Although it is just a small losses, however, small losses can turn into big losses in a short time, therefore, swift action must be taken to ensure that losses is kept to the minimum.

Lets look at the technical part and then we shall look at the fundamental side.

Looking at the long term chart, this stock is currently trading at an upward channel line. However, looking at the decreasing volume, it shows that the buying or support for this stock is losing momentum. As per the MACD and the Stochastic Indicators, both indicated a downward move for this stock in the near future.

As for the short term chart, it shows that this stock might be heading towards the 1st support line at around $9 and if it breaks through, I will not be suprised that it will head down to the $7 level. On the last candlestick pattern, it show a bearish engulfing pattern which is bearish.

As per the technical analysis above, I will sell this stock.

As for the fundamental analysis, the past 4 quarterly earning and the next 2 quarters estimate are as follows :
Q4 2009 = $-0.20
Q1 2010 = $-0.55
Q2 2010 = $1.34
Q3 2010 = $1.23
Q4 2010 = $0.05
Q1 2011 = $-0.40

As can be seen from the above quarterly earning, it fluctuate substantially. It is not stable. This is not the kind of stocks that fits into my investment portfolio.

Although this stock is trading at a very low PE ratio at around 4.69, it does not mean that this stock will move upward. Sometimes stock trade at low PE ratio because the investor know that the value of the company is not attractive going forward.

Moreover, this stock does not issue dividend.

As a conclusion, this is not the type of stock that I am looking to buy or hold unless it is trading at $2-$3 when it is in the middle of year 2009.

However, please note that my analysis is not 100% correct, therefore, you need to decide based on your own judgement.

Below are the recent news on this stock:


Citigroup (NYSE: C) Analysts Begin Coverage on US Airways Group, Inc. (NYSE: LCC)
December 18th, 2010

Citigroup (NYSE: C) research analysts began coverage for shares of US Airways Group, Inc. (NYSE: LCC) in a research note issued to investors on Wednesday. They set a “hold” rating and a $12.50 price target on the company’s stock. The analysts noted that the move was a result of a valuation call.

US Airways Group, Inc. (NYSE: LCC)’s stock traded down 0.69% on Friday, hitting $10.06. US Airways Group, Inc. has a 52 week range of $4.32 to $12.26. The stock’s 50-day moving average is $11.07 and its 200-day moving average is $9.89. Analysts predict on average that US Airways Group, Inc. will post $-0.40 earnings per share next quarter. The company has a market cap of $1.625 billion and a P/E (price-to-earnings ratio) of 4.69.

About US Airways Group, Inc. (NYSE: LCC)
US Airways, Inc. (US Airways) is engaged in the operation of a network air carrier. The Company provides air transportation for passengers and cargo. US Airways is a wholly owned subsidiary of US Airways Group, Inc. (US Airways Group). US Airways is a member of the Star Alliance, the airline alliance, which has 26 member airlines serving approximately 1,077 destinations in 175 countries as of December 31, 2009. US Airways has hubs in Charlotte, Philadelphia and Phoenix and a focus city at Ronald Reagan Washington National Airport. US Airways offers scheduled passenger service on approximately 3,000 flights daily to approximately 190 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, Central and South America.


Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in The Market Oracle Blog is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence. 

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