HXL - 2 Great Stocks to Buy on a Dip This Earnings Season
2024-07-27 04:00:00 ET
It's always interesting to monitor stocks to buy during earnings season if the market overreacts to any negative news. With that in mind, I think Delta Air Lines (NYSE: DAL) and Hexcel Corporation (NYSE: HXL) are worth a look. Both stocks were sold off recently, and I think the market is treating them a little too harshly. Here's why.
Supply and demand set prices in a free market, and that's the case in the airline industry. As such, airlines can raise prices when demand exceeds supply, but they will suffer yield pressure when the latter occurs. Unfortunately, the airline industry has experienced cycles of feast and famine, with airlines historically maintaining high capacity during challenging periods.
With the industry commentary over, it's time to turn to what's happening now. It's clear that after a period of strong demand growth -- not least due to passengers catching up on travel plans postponed due to the pandemic-related lockdowns -- airlines have significantly expanded capacity such that supply exceeds demand. The result is that airlines like Delta Air Lines and United Airlines have reported slightly disappointing second-quarter earnings and given moderate-looking third-quarter guidance.
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2 Great Stocks to Buy on a Dip This Earnings Season