Leon Cooperman: United Continental Could Double in Next 2–3 Years
Leon Cooperman on United Continental
In the previous part, we saw that Leon Cooperman has an optimistic view on the US equity market and economy and that he believes the right stock selection could be profitable for investors. He has a strong belief in United Continental Holdings (UAL), noting, “I would expect the stock to probably in the next 2 to 3 years be a double.”
Cooperman added, “We owned Delta at one time. And we decided to focus into United because we thought there is more margin expansion opportunities. United has a significant discount in their profitability versus the industry. So if they wind up with a big cap shrink and improving their profitability, you can have a leveraged return.”
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United Continental’s performance
United Continental Holdings (UAL) has one-year EPS (earnings per share) growth of 10.2% compared with the airline industry’s (DAL)(LUV) EPS of -1.4%. UAL is currently trading at a trailing price-to-earnings multiple of 9.4x versus the airline industry’s multiple of 13.5x.
As Cooperman believes that UAL has a significant discount on its profitability compared to the airline industry, it could be a profitable option.
UAL returned 0.6% in January 2018. However, the S&P 500 Index (SPX-INDEX) and the SPDR S&P 500 ETF (SPY) rose 5.6% each in January 2018. Although the returns are very low for UAL compared to the S&P 500 Index in January, there is an expectation that it could beat the index going forward.
In the next part of this series, we’ll analyze Leon Cooperman’s view of technology stocks.