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This CIO Thinks Airline Stocks Are 'Stupid Cheap' And Facebook Is The 'King Of Monetization'

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This CIO Thinks Airline Stocks Are 'Stupid Cheap' And Facebook Is The 'King Of Monetization'

Airline stocks, including big names like Delta Air Lines, Inc. (NYSE: DAL), American Airlines Group Inc (NASDAQ: AAL), Southwest Airlines Co (NYSE: LUV) and United Continental Holdings Inc (NYSE: UAL) have seen significant correction in the past few weeks and haven’t been performing well for the year.

However, according to Mark Yusko, Morgan Creek Capital CIO, the airline stocks are currently "stupid cheap."

Yusko was on CNBC Wednesday to explain why he thinks airline stocks are trading at cheap valuations. He also explained why he himself uses Twitter Inc (NYSE: TWTR), but considers Facebook Inc (NASDAQ: FB) as a defensive stock in the tech sector and a better play.

Fundamental Changes?

"The correction in them (airline stocks) certainly helps, but they have been cheap for years," Yusko said. "No one believes in the last three years that the airline business has fundamentally changed. For 35 years, the industry didn’t make any money."

Related Link: Imperial Capital Cuts American Airlines Estimates, But Maintains Outperform Rating

Consolidation = Higher Profits

On why the airline industry remained unprofitable for so long, Yusko said, "It’s about consolidation, right? Any industry that consolidates, and you get 70 percent or more of the capacity with the top three, you get higher profits."

King Of Monetization

Yusko was asked if he considers Facebook a defensive stock in the tech sector. He replied, "I do. Look, I think Facebook is a dominant player in social media, and I think they figured how to monetize better than anybody else.

"Twitter? Great company, great tool. I love it. I don’t use Facebook, I use Twitter; but Twitter hasn’t figured out how to monetize yet. Facebook is the king of monetization," Yusko concluded.

Image Credit: Public Domain

Posted-In: CNBC Mark Yusko Morgan Creek CapitalAnalyst Color Travel Tech Media Best of Benzinga

 

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