Why Southwest Airlines Co. Shares Could Fly to $30

Does this analyst make a good case? Or is it just more noise from Wall Street?

Jun 17, 2014 at 12:35PM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Southwest Airlines (NYSE:LUV) gained 1% today after Stifel upgraded the regional airline operator from hold to buy.

So what: Along with the upgrade, analyst Joseph DeNardi planted a price target of $30 on the stock, representing about 15% worth of upside to yesterday's close. So while momentum traders might be turned off by Southwest's recent pullback, DeNardi's call could reflect a sense on Wall Street that the concerns surrounding the airline's growth trajectory are becoming overblown.

Now what: According to Stifel, Southwest's risk/reward trade-off is rather attractive at this point. "We believe the recent pullback in airline share prices offers an attractive entry point as we expect the focus to shift away from the negative data points of Lufthansa and Iraq towards the strong performance airlines are likely to report over the next few quarters," said DeNardi. "[W]e view Southwest as best positioned to benefit from this dynamic given that (1) it has the highest exposure to the strong domestic pricing environment and (2) no direct risk related to the revenue uncertainty associated with the Pacific and Atlantic markets." Of course, with Southwest shares still up 115% from their 52-week low and trading at a 20-plus P/E, I'd hold out for an even wider margin of safety before betting too heavily on that outlook. 

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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