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Consolidation to Send 3 Airlines Stocks Up, Up, Up

Tuesday, 12 Jun 2012 | 6:29 PM ET

The Financial Times and Starmine compiled a list of Wall Street pros who have all beaten their benchmarks by more than 17 percent in the past year.

And among these esteemed stock pickers is Hunter Keay of Wofle Trahan. In a live interview on CNBC's Fast Money, he tells us a handful of airline stocks are buys – right here and right now.

If you’ve been burned by the space in the past, Keay feels your pain. “Historically it’s a dreadful sector – you can get your face ripped off,” he says.

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But he thinks times are changing for both airlines and airline investors. “Consolidation is occurring and capacity is being rationalized. Airlines are unbundling, they're hedging fuel costs more effectively and flier expectations are being better managed.”

And as you look to put money to work in the space, Keay suggests looking for companies that meet the following criteria:

-Ultra low-cost carriers
-Charge lots of fees for different services
-Fees are changing how customers behave
-Changes in customer behavior are keeping costs down

He's crunched the numbers already and says his favorite names are Spirit Airlines , Allegiant Travel and Copa Holdings.

“The industry is changing rapidly and I think we’re only in the second inning of what will be a major transformation,” says Keay. These stocks all win to it.

Posted by CNBC's Lee Brodie



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