The Aviation Sub-Sectors

The start of the week was a bit chaotic as some sectors started pushing up while other lagged behind in the big picture. Overall the market had a lot of stocks that moved generally sidways with a slight bias to the downside.

As stocks across the board noticed a strong rally last week many price values pushed back up towards making new highs. Many of the stocks trading right now are currently already sitting near their highs. As stocks continue to inch forward there is showing to be some resistance towards being able to break through.

Often times we see price start to stall out and test around these key levels before there being a significant catalyst to be able to push price towards the new levels.

Commercial Airlines

When we look at the Aviation industry you are trading a wide array of companies that all serve various purposes. The popular commercial airlines serve the consumer directly by providing transportation service for millions around the world. Some of the companies that are most known in this area are

  • American Airlines (AAL)
  • Delta Air Lines (DAL)
  • JetBlue (JBLU)
  • Southwest Airlines (LUV)
  • Azul (AZUL)
  • Spirit Airlines (SAVE)

Transportation and Logistics

Then we have the logistics and transportation sector which focuses mainly B2B sales as they deal more with manufactures and vendors that are transporting good from one location to the next. These stocks tend to be some of the leaders in determining the next direction of the market.

As less goods are being transported this will directly affect the consumer and retail good sales later on down the line. Strong logistics and transportation growth signals there is more cargo being moved which shows a thriving economy. Some of the top companies in the sector are :

  • FedEx (FDX)
  • Expeditors Washington (EXPD)
  • XPO Logistics (XPO)

Defense

There is the defense companies which focus in providing technology and uniquely designed hardware to our defense departments in our governments and to the governments of other countries.

These companies tend to perform strongly due to the methods which they generate income. They focus in creating large contracts for millions sometimes billions of dollars for their services or equipment.

These companies often due well in times of uncertainty in global conflict. As turmoil in other countries rise there is a sense of comfort in investing in defense companies. The move is based on the implications that there will be greater demand for their products during these unsettling times.

None the less many of the companies focused on defense also provide systems and technologies that are implemented in the commercial and private sector depending on the purpose of the mission. Some of the top Aviation Defense stocks to watch are:

  • Boeing (BA)
  • Honeywell (HON)
  • Northrop Grumman (NOC)
  • AeroVironment (AVAV)
  • Lockheed Martin (LMT)
  • Embraer (ERJ)

Service

With all these moving pieces various services companies have found a unique niche in being able to position themselves to aid these companies in their mission by providing their own services.

There range companies from leasing of aircraft to designing efficient and reliable ground service equipment. These companies are going to grow based on the overall progress of the industry.

You may notice a few of the stocks tick up or down against the overall industry trend and this may be due to reasons specific to that company. Overall once can look to trade these based on their own fundamental outlook for the company and considering how they have positioned themselves to grow over the next decade.

Some of the top services companies on my watch list are:

  • Spirit Aerosystems (SPR)
  • General Dynamics (GD)
  • Air Lease (AL)
  • Aircastle (AYR)
  • Heico (HEI)
  • Air Transport Services (ATSG)

At the start of the market we are seeing some pre-Market Movement from the stocks with the largest volume naturally. UBER, ALL, DAL, GD and HON are the top stocks moving in today’s pre-market trading.

As we near the holidays for the year make sure to readjust your trading strategy accordingly. There tends to be higher volatility in the last few weeks of the year.

Considering that next year is the election year many investors may be looking to secure their capitol during the uncertainty that is to come while the United States elects their new president.

To see the chart markups for some of the stocks mentioned in this post make sure to check out our Charts for the Week page where you can find interactive charts for the top 6 stocks for the week. As always happy trading and stay safe!

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