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Great time to buy LUV stock?

Active Member

Since it's evident that there are a lot of Southwest fans on this board, in case you have not seen, the stock price just hit a 5-year low today, going below $29/share.   

 

Despite my criticisms last week, I know & believe Southwest knows how to put  good money on the bottom line and they consistently pay dividends on their stock which have helped my bottom line over the years.

 

This could be a great buying opportunity for anybody that likes to play the investing game.  Most investing gurus are saying the stock price is way undervalued right now.

 

Good luck!

5 REPLIES 5

Re: Great time to buy LUV stock?

Top Contributor

Certainly undervalued. But you'd need to be in in for the long haul. They won't be paying dividends anytime soon. And the terms of the bailout grants mean no stock buy backs, which have helped increase shareholder return significantly. 

Re: Great time to buy LUV stock?

Active Member

Do you know is the cut-back on dividends a provision of the bail-out or just an internal decision for cash flow reasons in light of the impact of Covid?

 

Either way, the potential growth in the stock is where the real return on the investment will most likely be if people can be in it for the long haul as you indicated.

Re: Great time to buy LUV stock?

Top Contributor

@AustinRiley wrote:

Do you know is the cut-back on dividends a provision of the bail-out or just an internal decision for cash flow reasons in light of the impact of Covid?

 

Either way, the potential growth in the stock is where the real return on the investment will most likely be if people can be in it for the long haul as you indicated.


 

It's a provision of the bailout lending program. Forbes has a great article, but it might be pay-walled: What the government bailout means for airline investors (and CEOs)

 

 

Re: Great time to buy LUV stock?

Top Contributor

I'd be cautious. If the virus lingers this spring/summer and/or returns in the winter, it will go lower. Share price is down by 20% in the last two weeks. Is another 20% possible..  Yup.

When you are talking percentage losses, it doesn't make much difference if you start at 50 or 29.  A 20% drop costs you the same number of dollars.

 

to paraphrase an old saying "it's always darkest before it gets even darker."

 

Buying now will probably produce a profit. How long will it take? Good question.

 

Re: Great time to buy LUV stock?

Active Member

Well dfwskier, if I am going to say negative things about you on this page, it is only right that I say positive things as well when due.  Good post!  Agree with your sentiments on the stock.  Right now, it's a good investment depending on time horizons and strategies, but might not be the best time to buy.   

 

But then again, if I were that smart about the stock market, I would not still be working in a job where I have to fly Southwest 3-4 times a month so I can pay for two college tuitions!