MENU

Is it too late to buy Qantas Airways Limited shares?

Credit: Joits

The market may have drifted lower today but the Qantas Airways Limited (ASX: QAN) share price has managed to gain a little bit of altitude.

At the time of writing the shares of Australia’s leading airline are up almost 0.5% to $5.25.

This means that the Qantas share price has now gained over 53% since this time last year.

Is it too late to invest?

I don’t think it is and nor does one of Australia’s leading brokers.

According to a note out of Credit Suisse today, the broker has retained its outperform rating on the airline’s shares despite the recent rise in oil prices.

While the broker has reduced its price target ever so slightly because of its belief that fuel costs will be higher following this rise, its price target of $6.90 implies considerable upside for its shares over the next 12 months.

Including Credit Suisse’s dividend estimate for FY 2018 of 14 cents per share, there is a potential return of approximately 34% for Qantas’ shares.

The broker is bullish on Qantas due to its belief that its disciplined capacity management will lead to revenue growth that offsets higher fuel prices. Furthermore, the broker expects the airline to announce yet another share buyback when it releases its half-year results in February.

Should you buy shares today?

I think that Qantas would be a great investment today, just as long as oil prices don’t get out of control in the coming months.

The total return implied in Credit Suisse’s price target certainly makes for a compelling risk/reward in my opinion. And better yet, it isn’t the only broker that is bullish on its prospects. Last week UBS also came out with a buy recommendation and $6.70 price target.

I think its improved performance and cost cutting program make it a great option for investors and would suggest they choose it ahead of other airlines such as Virgin Australia Holdings Ltd (ASX: VAH) and Air New Zealand Limited (ASX: AIZ).

As well as Qantas, I think these blue-chip shares would be a great option for investors today.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.