Donald Trump was a staunch supporter of his slogan “Drill, baby, drill” throughout his re-election campaign. As the returning president, Trump promises to fulfill his intent to increase domestic oil and gas production in the oil/energy sector by reforming energy permits and increasing hydraulic fracturing on federal lands. Trump has commented on his intention to cut energy bills in half after his first year in office. Trump nominated Chris Wright to head the Department of Energy to increase domestic drilling.
Wright is the CEO of Freedom Energy Company New York Stock Exchange: ElbertHydraulic fracturing services provider for the oil and gas industry. If Trump succeeds in his attempt to boost domestic oil and gas production, he must lower oil and natural gas prices. By doing so, it will greatly benefit certain industries. Here are three stocks that stand to benefit from lower energy prices due to Trump’s “drill, baby, drill” agenda.
United Airlines: Lower fuel costs lead to lower CASM for the airline
Fuel and labor are the biggest costs for airlines. Lower fuel prices would improve the cost per available seat (CASM), which is calculated by dividing an airline’s total operating expenses by the total number of available seats. Operating expenses include fuel and labor costs as well as maintenance, airport fees and aircraft costs. A lower CASM indicates greater efficiency, contributes to profitability, and improves operating margin. CASM-ex is the cost per available seat mile minus fuel costs. For efficiency, it is a more accurate measure of how well an airline is handling the expenses it can control. CASM-ex helps track cost reduction actions and efficiency initiatives over time.
United Airlines stock forecast today
$104.68
3.43% upHe buys
Based on 17 analyst ratings
| High expectations | $150.00 |
|---|---|
| Average expectations | $104.68 |
| Low expectations | $65.00 |
United Airlines stock forecast details
United Airlines Holdings Company Nasdaq: UAL It improved its cash flows by 70% year-over-year in the third quarter of 2024. The improvement was driven by profitability, strong cost management and strong demand. The CASM index rose 0.1% year-on-year, and the CASM-ex index rose 6.5% year-on-year. Capacity rose 4.1% year over year, but adjusted pre-tax margin was a healthy 9.7%. Delta Airlines New York Stock Exchange: D Pre-tax margin 8.6%. Oversupply was a concern that drove down ticket prices, but it reached an inflection point in mid-August 2024. Total revenue per available seat (TRASM) fell 1.6%, again beating Delta’s TRASM with a 3.6% year-over-year decline. United Airlines spent $3 billion on jet fuel in the quarter, down 10.4% year over year, as the fuel price per gallon averaged $2.56.
United Airlines took a conservative stance on its fourth-quarter 2024 EPS guidance, forecasting $2.50 to $3.00, which is in line with analyst consensus estimates of $2.76.
Royal Caribbean: Lower fuel costs would boost profit margins for cruise ships
Cruise ships consume a lot of fuel to operate. Fuel costs can range from 7% to 15% of operating expenses. Key metrics are gross cruise costs per available passenger cruise days (APCD) and net cruise costs (NCC) per APCD, which are mostly reported excluding fuel costs. These are the drivers of gross margin returns.
Royal Caribbean Cruises Stock Forecast Today
$239.75
6.50% upModerate purchase
Based on 16 analyst ratings
| High expectations | $310.00 |
|---|---|
| Average expectations | $239.75 |
| Low expectations | $154.00 |
Royal Caribbean Cruises stock forecast details
Best cruise operator in its category Royal Caribbean Cruises Limited New York Stock Exchange: RCL It reported third-quarter 2024 EPS of $5.20, beating consensus estimates by 17 cents. Revenue rose 17.5% year over year to $4.89 billion, in line with consensus estimates. The load factor increased to 111%. Total margin returns increased by 13.4%. Total cruise costs per APCD increased 1.3%. NCC, excluding fuel per APCD, rose 4% year over year.
Royal Caribbean issued full-year 2024 embedded EPS guidance of $11.57 to $11.62 versus consensus estimates of $11.58. Unlimited growth, excluding fuel per APCD, is expected to rise 6.2% to 6.7% year-on-year.
Boeing: Lower fuel costs will boost aircraft sales
Aerospace giant Boeing Company NYSE: B.S 2024 was a turbulent year, ending in a costly union strike by 33,000 workers, which cost them an estimated $5.5 billion in damages. However, with more than half a trillion dollars in backlog, there is no shortage of demand for passenger aircraft.
Boeing stock forecast today
$192.21
11.34% upModerate purchase
Based on 23 analyst ratings
| High expectations | $250.00 |
|---|---|
| Average expectations | $192.21 |
| Low expectations | $85.00 |
Boeing stock forecast details
Lower fuel costs would improve airline profits, which would help encourage new aircraft orders. Airlines will be more incentivized and able to upgrade their fleets with newer, more fuel-efficient models to help boost margins and reduce CASM in the long term. Boeing will be an indirect beneficiary of Trump’s “drill, baby, drill” initiatives but will also benefit from its “Made in America” theme and policies.
Boeing stock rose 9% in December to close 2024 with a 26% loss. Boeing has the potential to be a major comeback story in 2025.
Before you consider United Airlines, you’ll want to hear this.
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