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Airlines Taking Flight?


If you’re a trader, JPMorgan suggests getting on board with the airlines, pronto. They say the group is about to take-off!

Although the team of 3 analysts cited improved demand and capacity discipline, the driving catalyst behind the call was sharply lower fuel prices.

"Jet fuel prices have collapsed roughly 40 cents per gallon since February, representing, on an annualized basis, a nearly $5.5 billion windfall for the industry. And yet, since the end of earnings season, consensus has barely budged," write the analysts.

As a result, the team has revised price targets across the industry Take a look:

JPMorgan 2012
Price Target Increases
Alaska Air Group$37.50     $39.50
U.S. Airways$14.50 $17
United Continental$35$38
JetBlue  $8.50 $9

Source: JPMorgan

Should you follow JPMorgan into the airlines ?

If you’re a short-term trader, Brian Kelly says the thesis warrants further investigation. Demand has really stayed strong, he says, and with lower fuel prices, there’s a compelling case to buy.

However, if you’re a long-term investor trader Joe Terranova says there are better places to put money to work. He reminds the desk that airlines are typically trading stocks. Unless you’re nimble, I would not buy, he says.

Posted by CNBC's Lee Brodie

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Trader disclosure: On May 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long GLD CALL SPREADS; Jon Najarian is long FIO CALL SPREADS; Jon Najarian is long FCX CALL SPREADS; Jon Najarian is long AET CALL SPREADS; Jon Najarian is long IDIX CALL SPREADS; Jon Najarian is long TBIX CALL SPREADS; Jon Najarian is long ALR CALL SPREADS; Jon Najarian is long OI CALL SPREADS; Jon Najarian is long FB; Jon Najarian is long GLUU; Jon Najarian is long DDMG; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long SBUX; Joe Terranova is long SJM; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long CNX; Joe Terranova is long LQD; Tim Seymour is long BAC; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Brian Kelly is long AAPL; Brian Kelly is long WFC; Brian Kelly is long GLD; Brian Kelly is long XLU; Brian Kelly is long INTC; Brian Kelly is long PEP; Brian Kelly is long HNZ; Brian Kelly is long MSFT; Brian Kelly is short EUROTOXX; Brian Kelly is short CAC40 with wires.