Will the Delta Air Lines Rally Continue?

With shares of Delta Air Lines Inc. (NYSE:DAL) trading at around $12.99, is DAL an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

delta planeDelta Air Lines has been on a tremendous run over the past couple of months. If you happened to buy in early December, then you’re ecstatic right now. Unfortunately, chances are good that you didn’t buy in early December. Therefore, the question is: can this rally continue?

The most important news to have come out of Delta in the past year is a 49 percent stake in Virgin Atlantic for $360 million. This will lead to more routes between the United States and the United Kingdom. Since Delta is unable to own a majority stake in an international company based overseas, this was the perfect solution to get more business out of London’s Heathrow Airport. In related news, Virgin Atlantic just hired Craig Kreeger as CEO. He was Senior Vice President at American Airlines (AAMRQ). There has been much celebration about this news, but Mr. Kreeger played a key role in a company that went bankrupt.

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Delta’s reputation has improved in recent years. While Delta still comes in the middle of the pack for passenger complaints, Delta is near the top of the class when it comes to mishandled baggage and bumping. In other words, it’s not likely that you will have these issues while traveling with Delta.

There are several negatives for Delta, one of which is heavy insider selling in December. It’s possible this was due to fiscal cliff concerns, but the selling was significant and should be mentioned.

Let’s take a look at some important numbers for Delta so we can get a better read on the situation.