Is United Continental Poised to Head Higher?

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With shares of United Continental (NYSE:UAL) trading around $44, is UAL 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

United Continental is a holding company and its principal wholly owned subsidiaries are United Air Lines and Continental Airlines. The company transports people and cargo through its mainline and regional operations; it also has contractual relationships with various regional carriers to provide regional jet and turboprop service branded as United Express. Companies and consumers worldwide look to travel at increasing rates since air travel is quicker and is becoming less expensive. As costs decrease and flights become more efficient, United Continental stands to see soaring profits as consumers and businesses look to travel more than ever.

United Continental, the parent company of United Airlines, plans to lower the number of daily departures from its unprofitable Cleveland hub starting in April because of insufficient demand, according to a memo to employees. Average daily departures will fall by around 60 percent, leading to 36 percent less capacity based on seats, Chief Executive Jeff Smisek said in the memo. ”Our hub in Cleveland hasn’t been profitable for over a decade, and has generated tens of millions of dollars of annual losses in recent years,” Smisek said. The reduction could result in up to 430 airport operations staff and 40 catering personnel losing their jobs, Smisek said.

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