This 1 Overlooked Airline Stock to Be the Best Bet on a Turnaround in 2026

Core Insights - Southwest Airlines has experienced a significant stock surge of 18.7%, closing at $48.50, marking a four-year high and the largest single-day percentage gain since 1978 [1] - The airline has undergone substantial operational changes over the past two years, including the end of open boarding and the introduction of fees for checked bags and basic economy fares, aimed at increasing revenue [2] - The transition to assigned seating and paid options for preferred locations has enhanced pricing power and revenue predictability for the airline [3] Financial Performance - The stock has shown impressive growth, with a 56% increase over the past 52 weeks, a 63% rise in the last three months, and a 19% gain in the past month, indicating strong market confidence in the airline's transformation [6] - Despite the recent rally, the stock remains attractively valued at 14.13 times forward adjusted earnings and 0.82 times sales, both below industry averages and historical multiples [8] Strategic Initiatives - CEO Bob Jordan has indicated that the airline is exploring new revenue streams, including airport lounges, while focusing on cost-cutting and operational efficiency [4] - Management anticipates profits to quadruple by 2026, significantly exceeding analyst expectations, as the new revenue strategies reshape the business model for sustainable growth [4] Company Overview - Southwest Airlines, based in Dallas, Texas, operates a fleet of Boeing 737s and serves 117 airports across 11 countries, with a market capitalization of approximately $25.1 billion [5]