investment fund update 4/21/2014
DESCRIPTION
Investment Fund Update 4/21/2014. Trade Activity 3/28/2014: Bought GMCR (4 shares) and NKE (6 shares) 4/15/2014: Sold GMCR (4 shares) Current Fund Value $1, 397.46 Available cash: $954.06. Alaska Air Group (NYSE: ALK) 21 April 2014 Saad Hirani | Jeremy Mack | Henry Zhang. Agenda. - PowerPoint PPT PresentationTRANSCRIPT
INVESTMENT FUND UPDATE 4/21/2014
Trade Activity 3/28/2014: Bought GMCR (4 shares) and NKE (6 shares) 4/15/2014: Sold GMCR (4 shares)
Current Fund Value $1, 397.46 Available cash: $954.06
Sources: 1
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Alaska Air Group (NYSE: ALK)21 April 2014
Saad Hirani | Jeremy Mack | Henry Zhang
AGENDAIndustry AnalysisCompany AnalysisCompany FundamentalsChart AnalysisCompetitorsCompetitive AnalysisEntry Strategy
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INDUSTRY ANALYSIS – AIRLINE INDUSTRY
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Overview Of Airline Industry in USA
100 certified passenger airlines operating over 11 million flight departures per year
Accounts for about 1/3rd of global air traffic
815.3 million scheduled passengers traveled on USA airlines in 2012.
Commercial aviation contributes more than 8% of USA’s GDP.
The number of passengers will grow to 1.2 billion in 2032, according to the FAA's annual forecast.
Carriers expected to make a profit of $6.3 billion in 2014
US Airline Industry to remain profitable for two more decades
Oil price volatility remains a significant challenge
http://www.nasdaq.com/article/airline-industry-stock-outlook-dec-2013-industry-outlook-cm310424#ixzz2vEkdMZEL
Industry Outlook
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
With a Zack’s industry rank of #16 and expected profit growths, and airline industry appears to be profitable for the next few years.
COMPANY ANALYSIS – ALASKA AIR GROUP INC.
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Company Overview Airline company serving 95
cities through expansive network in Alaska, Canada, Mexico, Lower 48.
7th largest US airline in passenger traffic
Fleet Size: 134
Value Proposition Ranked highest for consumer
satisfaction in North American airlines for 6 years in a row.
High number of partnerships with other airlines. (offers largest number of alternative airlines on mileage programs)
http://centreforaviation.com/images/stories/2014/Mar/28/revenue.pnghttp://en.wikipedia.org/wiki/Alaska_Airlines
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
With a Zack’s industry rank of #16 and expected profit growths, and airline industry appears to be profitable for the next few years.
COMPANY FUNDAMENTALS
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Essential Statistics EPS: 7.18 P/E: 12.95 Beta: 0.98 Market Cap: 6.40B ROIC: 13% (2012)
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
With a Zack’s industry rank of #16 and expected profit growths, and airline industry appears to be profitable for the next few years.
ALK STOCK PERFORMANCE
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Steady rising price for the last year, as well as since early 2008.
Accelerating price increases over the past year Jump in stock price in July 2013 due to positive earnings
surprise of 16% over Wall Street consensus Has met or beat Wall Street expectations for last 8 quarters.
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
COMPETITORS
Source: Google FInance
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Main Competitors
Alaska Air remains one of the most efficient, profitable, and innovative airlines..
EPS growth Delta, Southwest, and American Airlines
are the Alaska’s main competitors Alaska Air has a higher profit margin
than Southwest, JetBlue, and American Airlines
P/E and Beta lower than industry average
Lower income than Southwest and JetBlue due to Alaska’s determination to pay off debt and a large increase of new aircraft
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
WHY ALASKA IS SUCCESSFUL?
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What drives Alaska’s success
Promotion
Distribution
Personal Anecdotes
Positioning & Product
Corporate Image
Pricing & Marketing
Information System
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
Strong Marketing, developing a positive reputation with consumers and a safe distribution of flights across different
companies such as Delta & AA has allowed Alaska to enjoy great success.
What drives Alaska’s success
Pricing & Marketing
Information System
COMPETITIVE ANALYSIS
Source: Bloomberg, Wikipedia10
Competitive Analysis
Coming into its most profitable months, and having already invested a lot of cash back into the company, this is a perfect time to invest.
Net-Zero Debt Alaska Air has strong allies within the
industry that supply around 10% of their profit, most notably with Delta
Efficient As a response to Delta’s increasing
presence in Seattle, Alaska has increased ties with American Airlines
Leverage Capital expenditure on newer aircraft
that are larger more fuel efficient (737-900ER)
9 purchased in 2013
After this Friday, April 25th, Alaska Air will enter into its 2 most historically profitable quarters
The airline industry as a whole is at its peak during the summer months
Alaska’s fulfillment of a “Net-Zero Debt” reality.
As of the end of 2013, the company's previously unfunded pension plan is now fully funded.
Alaska has modified its retirement plans over the years while increasing contributions ($40 million less pension expense in 2014)
Catalysts
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary
With zero net debt & partnerships where Alaska gains from it’s competition’s business have established Alaska as a leader in the US
airlines industry.
SUMMARY & RECOMMENDATIONS
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With Alaska expected to meet earnings, there will be great positive sentiment in the market and Alaska’s share price could
realize significant gains.
Entry Strategy
Invest tonight
Earnings on April 25th 2014
Hold for summer 2014
Take advantage of stock growth during summer travel season.
Industry Analysis | Company Analysis | Company Fundamentals | Stock Performance | Competitors | Summary