Delta (NYSE:DAL) advanced as much as 1.4 percent in morning trading on Tuesday. The reason? A strong bullish thesis, if pundits like Jim Cramer and the analysts at Deutsche Bank are correct.
Deutsche Bank reiterated a Buy rating on Delta stock this week with a price target of $20, a 34 percent upside on its Monday closing price of $14.93. Highlighting the stock and the Deutsche Bank price target on yesterday’s broadcast, Cramer said that the airline sector was one of his favorite speculative plays for 2013.
The reasons why are fairly straight forward. Years of bankruptcy and consolidation have yielded a handful of highly-resilient and cost-conscious carriers. An improved supply-versus-demand dynamic through 2013 should afford airlines the opportunity to increase ticket prices. Coupled with a recent decline in fuel prices — from $3.22 per gallon in February to $2.97 per gallon in March — and a variety of new revenue initiatives such as luggage-to-door service, the stocks could see some positive price action.
According to Cramer, the Deutsche Bank analysts are also expecting “a 37 percent increase for United Continental (NYSE:UAL), 32 percent for Southwest (NYSE:LUV) and 27 percent for US Airways (NYSE:LCC).”
Moving on, Cramer indicated that mortgage insurers were another top speculative pick for 2013…
“Radian Group (NYSE:RDN), you know that’s my favorite of the group,” Cramer exclaimed on his Monday broadcast. The company, which operates in the mortgage insurance and financial guarantee sectors, was up as much as 2.22 percent in morning trading on Tuesday. The stock is up more than 70 percent this year to date, and left the S&P 500 in the dust in February.
Ostensibly, as the housing market improves mortgage insurers stand to profit. Recently-released data suggests that the U.S. housing market is in the throes of a modest but real recovery.