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Airlines were some of the hardest-hit stocks during the bear market brought about by the coronavirus. In fact, the Dow Jones U.S. Airline Index is still down 60% today from its Feb. 12 closing high. Even worse, last week's low was below the initial panic low in March.
In other words, the broad market's rebound happened without any help from airlines at all.
So is now a good time to buy airline stocks? Money Morning Chief Investment Strategist Shah Gilani says it's "up in the air" in a bad way.
The broad view is that most industries will recover, but not all. And we're going to show you why today. Then we'll show you an industry to buy instead as the economy recovers.
First, here's why there's no telling the fate of the airline sector…
Airline Stocks Are Not What You Think
With such a disparity in performance, investors might see this as a buying opportunity. Airline stocks have nowhere to go but up, right?
The economy is starting to open. People are itching to get back to work and to move about like they used to.
COVID-19 lockdowns inspired a lifestyle change that's kicking a new billion-dollar market into high gear – and this stock is the best way to play it. Get the pick here – it's free…
Many businesses are learning to adapt to social distancing and facemasks. They are cleaning their restaurants and stores to prevent the spread of the virus. And they want to make customers feel safe and comfortable spending their money.
Why aren't airlines included here? They're taking every measure to keep customers and employees safe, after all. They're blocking middle seats and changing boarding procedures to help customers. They know people are still very leery of being cooped in a flying tube with strangers.
Airline stocks even offer some beefy dividend yields. For example, Delta Air Lines Inc. (NYSE: DAL) has a dividend yield of 6.96%. And price/earnings ratios are among the lowest. Delta's trailing p/e is 4.33.
So why then are people like Warren Buffett steering clear of the airline sector?
Here's what Shah has to say…