There is much to be said for investing in the best-run companies in a sector, such as Southwest Airlines (NYSE: LUV).
Many previous articles on this site have been bullish on Southwest Airlines.
Southwest Airlines is up for the last month, quarter, six months, and year of market action. For 2014, Southwest Airlines has soared more than 120 percent (chart below). It is up nearly 7 percent for the last month of market action, so it is not tailing off, either.
By many standards, Southwest AIrlines is the best domestic airlines.
Like all others, it is benefiting from the drop in fuel. The price of jet fuel is nearly half the operating expenses for an airline. As the “blue chip” in the sector, Southwest Airlines naturally benefits more than others. That is due to it being better managed.
It also treats its passengers betters.
Spirit Airlines (NASDAQ: SAVE) unabashedly charges as many fees as possible. Wall Street approves as Spirit Airlines is up more than 63 percent for 2014. Spirit Airlines pretty much charges its passengers for everything, including printing a ticket. Spirit Airlines has also been recommended by articles on this site
By contrast, Southwest Airlines is the only one that does not charge its passengers a fee when they change their ticket.
The soaring share price for Southwest Airlines and unmatched profitability prove that this approach works. It inculcates loyalty in its passengers. That is why Southwest Airlines is the only domestic carrier to not only go bankrupt, but not post a loss.
Earnings-per-share are expected to increase by more than 40 percent over the next five years for Southwest Airlines.
Hopefully it will share more that with its shareholders in the form of an increased dividend yield, especially with the price of fuel falling. The dividend yield is just 0.59 percent. Southwest Airlines can and should do better for its shareholders!