Does Southwest Airlines Belong in Your Portfolio?

With shares of Southwest Airlines (NYSE:LUV) trading around $26, is LUV an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Southwest Airlines is a passenger airline that provides scheduled air transportation in the United States. Consumers and companies across the nation are now looking to travel at an increasing rates, and since air travel is quicker and is becoming less expensive, it is becoming a common transportation method for many. As costs decrease and flights become more efficient, look for business and retail customers to fly at rising rates. Southwest Airlines stands to see soaring profits as consumers and businesses look to travel more than ever.

Southwest Airlines was fined $200,000 Thursday for an October promotion in which it advertised cheap fares that weren’t actually available. It’s the second time in 10 months that the U.S. Department of Transportation has rapped Southwest’s knuckles for violating the agency’s rules on fare advertising. In addition, Southwest must pay $100,000 from a previous fine for the same type of violations. The DOT last July had suspended that penalty upon Southwest’s pledge to correct the violations. In a consent order with Southwest, the DOT said the Dallas-based airline had engaged in “unfair and deceptive practices and unfair methods of competition.”

“DOT’s full-fare advertising rules were put into place to ensure that consumers are not deceived when they search for plane tickets,” Transportation Secretary Anthony Foxx said in the department’s announcement. “Consumers have rights, and DOT will continue to take enforcement action against carriers and ticket agents when our price advertising rules are violated,” Foxx said.