After another burst of intense selling early last week, stocks staged a mighty comeback, with the S&P 500 up 10.7% for the week, and just about all sectors of the market experiencing good-sized gains during the rebound.
One of the groups that had been suffering during the grinding bear market had been the airline and air freight stocks, even with crude oil prices plummeting since last summer. Makers of airplanes have not fared well either, particularly outfits like Textron, which sells Cessnas, or even the biggest name in the plane game, Boeing.
"Despite a 3% decline in oil price in February, airline shares suffered from weak January air traffic reports," says Sam Subramanian, editor of AlphaProfit Sector Investor, a newsletter covering Fidelity "select" funds and sector exchange-traded funds. He just recommended Fidelity Select Air Transportation (FSAIX) to his subscribers late last week.
Since bottoming out at $14.55 on March 9, the fund rallied to close at $17.43 by week's end. "Thanks to lower fuel prices, air transportation is among the few groups offering the prospect of positive year-over-year earnings comparisons. For now, the steep falloff in travel and freight demand is preventing this positive from coming to light. We believe air transportation shares will start to fare better if the economy can at least stem its rate of decline."
The biggest holdings inside of Fidelity Select Air Transport are Boeing, Delta Air Lines and Precision Castparts, Fedex, Spirit Aerosystems, and Continental Airlines.
FSAIX is coming off of its worst annual return for a calendar year, dropping 32.5% in 2008. The fund is currently at prices last seen in 1996.
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