This week, the Paris Air Show kicks off. It's the premiere event for airline manufacturers, as they traditionally book orders from airline companies around the globe.
All eyes, however, will be on Boeing Co. (NYSE: BA), which hasn't been able to sell a single commercial jet in the last two months.
Shares of Boeing have fallen 20% since reaching an all-time high in March as the fallout continues from two deadly crashes involving its 737 Max aircraft.
Before the Paris Air Show began, Boeing CEO Dennis Muilenburg said that he was disappointed that his company failed to disclose more about the failed safety feature at the center of both crashes.
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Unfortunately for Boeing, the Federal Aviation Administration has offered few clues about when it will approve the company's plan to fix the software and bring the 737 Max back into operation.
With that said, the Paris Air Show is an event where manufacturers typically announce sales plans.
But one American airliner is more in focus this week than any of its competitors - because the company's stock is currently sitting in our "Strong Buy Zone."
To find the best stocks to buy right now, we use the Money Morning Stock VQScore™. This proprietary system tracks the 1,500 most profitable stocks on the market and assigns them a score from 1 to 4.
The higher the score, the more likely this stock is to break out in the coming months.
Let's dive into why this is our best airline stock to buy now...
Finding the Perfect Airline Stocks
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This week, VQScore flashed a buy recommendation on Delta Air Lines Inc. (NYSE: DAL).
The Atlanta-based airline giant announced in March that it plans to overhaul its fleet of Boeing 757 and 767 aircraft over the next two years.
Delta has been working on a plan to replace one-third of its existing fleet - one of the oldest and largest of any company - over the next five years.
Before Boeing's fallout, Delta was reportedly in serious discussions with the airline manufacturer about a new fleet order worth more than $10 billion. However, Airbus has also been in discussion to counter any offer with a possible new version of its A321.
At a time when Delta is engaging in a significant level of capital expenditure, it's essential to consider why the company might be an excellent stock to buy.
When we dig under the hood, we see three things:
First, the stock just earned one of our top VQScores with a 4.75 rating. Anything over 4 is considered a "Strong Buy."
Specifically, this rating signals the firm is undervalued while demand for shares is building. EPS is accelerating, which will lead to increasing demand for DAL stock.
Second, the company has looked to expand its international reach and has long been considered a potential suitor for struggling Italian airline giant Alitalia.
Third, we're seeing Delta stock ownership increasing by the world's most famous and influential money manager: Mr. Warren E. Buffett.
Is Buffett's Next Buy an Airline?
One of the most popular questions asked by investors is, "What stocks are Warren Buffett buying?"
In 2018, Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A) increased its stake in Delta by 11%.
His firm now owns a more than 10% stake in the company. And there has been speculation that Buffett's firm could outright buy the entire airline giant.
In the past, Warren can be quoted saying he would never buy airline companies...
But just this month, Berkshire chair Charlie Munger discussed with a Chinese publication how Berkshire builds its portfolio...
Munger said every investor needs to change their views from time to time as the world shifts. He noted that industries and sectors change over time, and so too should investors' expectations, implying that he and Buffett aren't nearly as opposed to airline stocks as they once were.
Munger noted that Berkshire started buying airline stocks because small changes had occurred and the stocks were becoming incredibly cheap. The firm started buying even though he and Buffett never liked to invest in airline stocks.
The fundamentals of the industry have changed...
Buffett said that there were multiple similarities between the airline industry and the railroad industry. Berkshire had "hated" railroad firms for a long time, but he noted that they changed their minds "because the facts changed."
One of the other under-the-radar hints that Berkshire might buy Delta is the airline's recent renewal of its 23-year partnership with American Express Co. (NYSE: AXP) - Berkshire's fifth largest holding.
The synergy with American Express and Delta's line of credit cards makes the airline a major marketing company with an extraordinary reach around the globe.
So, if you're trying to determine which airline stocks to buy ahead of a busy travel season, look no further than Delta Air Lines.
With its success at the Paris Air Show, its expansion overseas, the backing of Warren Buffett, and its 4.75 VQScore, we could see shares climbing 44% over the next 12 months.
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