Wednesday, June 11, 2025
United Airlines, Delta Air Lines, and LATAM Airlines Group are emerging as the front-runners in the airline sector, demonstrating remarkable earnings growth and solidifying their positions as top investment choices. These industry giants have successfully capitalized on the post-pandemic recovery, with each airline reporting stronger-than-expected financial results, expanded operations, and impressive profit margins. Their strategic initiatives, including fleet upgrades, increased capacity, and global market expansions, have fueled continued growth and performance, which is reflected in their stock market upside. As the airline industry rebounds, these three companies are well-positioned to deliver sustained returns, making them standout picks for investors looking to capitalize on the sector’s ongoing growth.
Today’s Zacks Investment Insights feature focuses on Copa Holdings (CPA), Euroseas (ESEA), LATAM Airlines Group (LTM), Delta Air Lines (DAL), and United Airlines (UAL).
Top Transportation Stocks to Watch for Continued Growth
As the stock market sees a historic rebound, transportation sector stocks have been riding the wave of recovery, with standout performances from airline operator Copa Holdings and container shipping leader Euroseas.
Reaching new 52-week highs in June, these highly-rated transportation stocks have become particularly attractive for their generous dividend payouts, with expectations for further growth as they continue to climb.
Copa Holdings: Leading in Profitability
Based in Panama City, Panama, Copa Airlines has established itself as the leading carrier in Central America, serving over 60 destinations across North and South America and the Caribbean. The airline has capitalized on the post-pandemic travel surge, maintaining operating margins exceeding 20%, positioning it as one of the most profitable airlines in the world.
This performance surpasses most Latin American airlines, including LATAM Airlines Group, as well as many U.S.-based carriers, with Delta Air Lines and United Airlines holding the highest operating margins among domestic players at 10-12%. With Copa projecting a 7-8% capacity increase this year, it’s no surprise that the airline has earned attention from investors.
Copa Holdings is experiencing a notable rise in earnings, with a forecasted 14% growth in fiscal 2025 EPS, reaching $16.64 per share. Additionally, estimates for FY25 EPS have risen by 6% over the past two months, now exceeding earlier forecasts of $15.60.
Euroseas: Strengthened by Strategic Fleet Optimization
In a similar vein, Euroseas has demonstrated impressive profitability, fueled by its effective fleet management and solid position in the market. Operating out of Athens, Greece, for over 130 years, the company enjoys favorable charter rates that significantly boost its revenue. Euroseas continues to refine its fleet by selling older ships and investing in newer, more efficient vessels to maintain its competitive edge.
Recently, Euroseas announced the sale of its 2005-built containership, M/V Marcos V, for $50 million. Although the company’s earnings are expected to dip 2% in FY25 to $14.50 per share, EPS estimates have increased by 2% over the past 60 days.
Affordable P/E Ratios for Copa and Euroseas
The valuation of Copa and Euroseas stocks suggests significant upside potential. Currently, CPA and ESEA trade at a forward price-to-earnings (P/E) ratio of just 6.4X and 2.8X, respectively. Even though both stocks have surged—CPA up more than 20% year-to-date and ESEA up over 15%—their valuations still indicate that there’s room for growth.
Attractive Dividends from Copa and Euroseas
In addition to their strong performance, both Copa and Euroseas offer attractive dividend yields.Copa’s dividend is exceptional compared to other airline stocks, as many competitors are unable to provide payouts due to high operational expenses. In contrast, Euroseas offers an attractive 6.36% yield, well above the industry average of 2.43%. Even more promising is Euroseas’s modest payout ratio of only 16%, indicating significant potential for future dividend increases.
Conclusion
Copa Holdings currently holds a Zacks Rank #1 (Strong Buy), with an average price target of $152 per share, indicating a 41% upside potential. Meanwhile, Euroseas carries a Zacks Rank #2 (Buy), with a price target of \$56 per share, offering a 37% upside potential.
Why You Shouldn’t Miss Zacks’ Top Picks
Since 2000, Zacks’ top stock-picking strategies have far outpaced the S&P’s average annual gain of 7.7%. These strategies have delivered average annual gains of +48.4%, +50.2%, and +56.7%, making them some of the most successful stock recommendations in the market.
United Airlines, Delta Air Lines, and LATAM Airlines Group are leading the airline sector with impressive earnings growth and strong stock market performance, driven by strategic expansions and post-pandemic recovery. These industry giants are well-positioned for continued success and upside potential.
