-Slower growth, short term setbacks hurt 2019 results; coronavirus worry

-By adding new planes and flights, growth expected to rebound in 2020-21

-Improved sentiment and easier comps in 2020 could result in 30% upside

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I’ve been following the U.S. airline industry for decades now and for many of those years traders used to say these stocks were rented not owned. Before the consolidation in the U.S. industry over the past ten years, rising oil prices and “fare wars,”—remember those?—would send these super cyclical stocks reeling regularly. 

Not anymore.  Though still cyclical, the overall industry dynamics have improved significantly, and as you’ll see below shares of Spirit Airlines (SAVE), the ultra-low cost carrier, look attractive right now because of what I view as short term issues that should fade.

Another recurring issue to travel stocks are outbreaks of war or pestilence, to use an old-fashioned term. The coronavirus disease outbreak in China has dented airline stocks. I don’t wish to downplay the seriousness of it; people are dying.  That said, it’s also not good for air travel.

My estimation is that long term it probably won’t be a huge factor. This is neither the first nor the last such outbreak. Unless you a...

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