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Air Travel Boom Could Provide Tailwind for Investors

By U.S. News & World Report

Airline stocks have been on fire of late, with shares of the big four U.S. airlines stocks — Delta Air Lines (ticker: DAL), Southwest Airlines ( LUV), United Continental Holdings ( UAL) and American Airlines Group ( AAL) — up between 36 and 82 percent in the past year.

According to Boeing Co. ( BA) CEO Dennis Muilenburg, the aviation boom may have just started to take off.

Muilenburg says airline traffic growth will be good news for Boeing and other commercial airline producers. However, it could also be a good sign for the airlines themselves. “While the global economy is tending to be a bit flat, I would argue that the aerospace market is in a growth position,” he says.

Boeing estimates air traffic growth is up 8 percent this year and predicts total global air traffic will grow at an average annual rate of 4.7 percent for the next two decades. The total global fleet of commercial aircraft will expand from 23,480 today to 46,950 in the same period, Boeing estimates.

[See: 9 Most-Loved Stocks in the Trump White House.]

Delta, Southwest, American and United account for more than 70 percent of total U.S. domestic flights. In recent years, airlines have focused on becoming more efficient with their operations. The results speak for themselves, as the airlines have reported record profits in the past two years.

Airlines have even impressed one famous industry critic so much that he has invested billions of dollars in each of the major U.S. airlines stocks. Over the past year, Berkshire Hathaway ( BRK.A, BRK.B) CEO Warren Buffett has accumulated $2 billion stakes in Delta, American, United and Southwest. As recently as 2013, Buffett called airlines a “death trap” for investors.

At Berkshire’s 2017 annual shareholder meeting in May, Buffett said that the airline business remains a “fiercely competitive industry” but that the top companies “at present are earning quite high returns on invested capital.”

Last year, JP Morgan analyst Jamie Baker predicted that airline margins would contract to just 10.5 percent during the next economic downturn, higher than their peak levels during previous economic booms.

“An industry that is capable of earning in a downturn what used to be reserved for the peak unquestionably warrants a re-rating,” Baker wrote in 2016.

[See: 9 Investing Steps From Warren Buffett’s Playbook.]

Airline stocks certainly seem to have plenty of upside if the companies can convince skeptical investors of the durability of their current earnings power. Shares of American, Delta and United are all currently trading at low forward price-earnings ratios in the high single digits.

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Air Travel Boom Could Provide Tailwind for Investors originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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