About a month ago, Benzinga spoke with Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, about the brand new U.S. Global Jets ETF JETS 0.89%, the only pure-play airline ETF.
Over the past month, airline stocks and the new ETF have significantly lagged the S&P 500. Benzinga recently had a chance to follow-up with Mr. Holmes and discuss what’s been going on in the airline industry, if there is cause for concern and what airline investors should be watching closely throughout the remainder of 2015.
Airline Tailspin
The S&P 500 is slightly up in the last month of trading, but stocks of all of the “Big 4” airlines (Delta Air Lines, Inc. DAL 2.57%, United Continental Holdings Inc UAL 0.64%, American Airlines Group Inc AAL 0.92% and Southwest Airlines Co LUV 0.08%) are down big in that span.
When Benzinga asked Holmes why airline stocks have been struggling, he pointed the finger at recent airline capacity increases. “There’s this thought process out there that airlines are going to dilute their cash flow, but I don’t think so,” he explained.
Holmes also indicated that he has seen no change in the past month that has altered his bullish, valuation-based long-term fundamental thesis for airline stocks.
Oil ‘Sweet Spot’
When asked about Goldman Sachs’ forecast of $50 oil in 2020 and the impact that low oil prices could have on airline stocks, Holmes explained that…
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