While the stock market remains near all-time highs, many individual stocks haven’t taken off for the ride. Some companies have simply been out of favor, or haven’t been able to grow quickly over the past few years, making for a poor investment.
Other companies have had to deal with significant headwinds, whether from consumer tastes, regulatory costs, or other challenges. The airline industry is no stranger to any of those issues over the past few years.
The industry has been looking to consolidate carriers, and further make strides on profitability. And others, such as Southwest Airlines (LUV) are looking to fend off activist investors.
Over the past year, Southwest shares have been basically flat. That’s not bad, considering earnings growth sank 46% in the past year. The industry is having to contend with higher costs, which even activist investors can’t fix.
But the company is working on several innovations, including ending its practice of open seating, and charging more for various services.
Action to take: Southwest are starting to trend higher, and could break out of their trading range for further gains in the months ahead. That makes the stock an interesting speculation as a breakout play.
At current prices, shares pay a 2.5% dividend.
For traders, a breakout bodes well for call options. The January 2025 $35 calls, last trading for about $0.90, could see high double-digit gains, especially on a year-end rally for shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.