Shares of Delta Air Lines (NYSE:DAL) moved higher last week after the airline reported that revenue per available seat mile (RASM) reached the high end of its guidance range last quarter. That will allow it to beat analysts' estimates for Q2 earnings per share -- and it also suggests that Delta is entering the third quarter with plenty of momentum.

However, Delta isn't the only airline benefiting from favorable industry conditions right now. Spirit Airlines (NYSE:SAVE) is arguably in even better position than its larger rival. And with the shares trading at an extremely low valuation, Spirit Airlines stock looks like a great buy for investors in July.

In position to capitalize on the 737 MAX grounding

The biggest development in the U.S. airline industry in recent months has been the grounding of the Boeing (NYSE:BA) 737 MAX. Several U.S. airlines -- most notably, Southwest Airlines (NYSE:LUV) and American Airlines (NASDAQ:AAL) -- have been forced to cancel lots of flights due to having dozens of planes out of service.  Delta Air Lines' strong investor update confirmed that this is creating substantial revenue opportunities for other airlines.

Spirit Airlines has much greater route network overlap with Southwest and American than Delta does. Spirit has major bases in Atlanta, Baltimore, Chicago, Dallas, Las Vegas, Los Angeles, and Orlando, all of which are among Southwest Airlines' 10 busiest focus cities. American Airlines also has big hubs in Chicago and Dallas -- and to a lesser extent, Los Angeles.

A yellow Spirit Airlines jet

Spirit Airlines has lots of route overlap with two big 737 MAX operators. Image source: Spirit Airlines.

Furthermore, Spirit Airlines is one of American Airlines' biggest competitors in South Florida. American Airlines has a hub in Miami -- incidentally, its main base for the Boeing 737 MAX -- while Fort Lauderdale is Spirit's largest focus city.

With Southwest and American both forced to cancel more than 100 flights a day, it's no surprise that other airlines are seeing higher load factors and have been able to charge higher fares. Back in April, Spirit Airlines projected that RASM would rise 5% in the second quarter. But Spirit has beaten its guidance by a wide margin at times in recent years. Given that most of its peers have raised their unit revenue forecasts over the past month, there's a good chance that the second quarter was one of those times.

Other factors are improving

Strong unit revenue gains at Spirit Airlines would drive massive profit growth, due to the carrier's relatively favorable cost outlook. Oil prices have moderated since May, so Spirit's fuel costs per gallon will probably decline in the second quarter and could be down significantly year over year in the third quarter. That will help offset nonfuel unit cost increases.

Spirit Airlines also has a long track record of strong nonfuel cost performance. Despite facing substantial headwinds this year, the carrier is on track to limit its nonfuel unit cost growth to just 2% to 3%.

This isn't just a one-quarter tailwind

A new issue with the 737 MAX's handling discovered recently means that Boeing won't be able to get the plane back into service until late October at best. A November or December return is probably more realistic, and it wouldn't be shocking if the 737 MAX's return to commercial service slips into early 2020.

As a result, Spirit Airlines will continue to benefit from capacity constraints impacting American Airlines and (especially) Southwest Airlines in the second half of 2019. That should enable continued solid RASM growth, even as Spirit faces tougher year-over-year comparisons.

A Southwest Airlines Boeing 737 MAX parked on the tarmac

Southwest's 737 MAX fleet will be grounded for many more months. Image source: Southwest Airlines.

Additionally, any market share gains that Spirit makes this year could be more than temporary. For one thing, Spirit Airlines is still growing rapidly, boosting capacity at a double-digit rate annually. Moreover, the airline has dramatically improved the quality of its service over the past year or two. Customers who try flying Spirit this summer because American and Southwest are too expensive or don't have seats available may find that the budget carrier is worth considering for future trips as well.

The price is right

Spirit Airlines stock currently trades for just nine times the average analyst EPS estimate for 2019. That's an absurdly low valuation for a company that is growing quickly and consistently earns high profit margins.

While Spirit will have to contend with a rebound in capacity from Boeing 737 MAX operators next year, making RASM growth harder, the carrier has plenty of potential earnings growth drivers. A new loyalty plan and greater connecting route opportunities could boost unit revenue. Meanwhile, several factors that are driving up unit costs in 2019 won't repeat in 2020. Spirit will also continue to expand its fleet of ultra-fuel-efficient Airbus A320neos over the next year.

Thus, analysts expect Spirit Airlines to grow EPS by 11% next year, on top of an estimated 28% surge in 2019. Given this level of earnings growth, shares of the budget carrier could easily double in the next year or two. That makes Spirit Airlines a great stock for growth-seeking investors to consider buying in July.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.