We just covered the
Top 10 Stock Picks of Billionaire Paul Singer. Southwest Airlines Co (NYSE:LUV) ranks #4 (see Top 5 Stock Picks of Billionaire Paul Singer).
Elliott’s Stake: $1,140,099,220
Airlines are reeling amid the Middle East conflict, with higher oil prices and softer demand hitting margins across the sector. But Southwest Airlines Co (NYSE:LUV) is taking clear steps toward recovery, which supports a longer-term buy case. The company has already moved on to pricing power. It increased bag fees by $10, which is expected to add about $1.16 billion in annual revenue (roughly +3.3%). This step would also support EBITDA.
Southwest Airlines Co (NYSE:LUV) is working to take out costs through variable cost reductions and efficiency measures, which is critical when fuel spikes compress margins. Fleet modernization is another support. Ongoing upgrades to more fuel-efficient Boeing 737 MAX aircraft provide incremental fuel savings and help offset part of the oil price impact over time. Despite near-term pressure, the financial base remains solid.
While we acknowledge the potential of LUV as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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