Does Ryanair Holdings (RYAAY) Have Strong Growth Potential?
Fiduciary Management Inc. (FMI), an independent money management firm, released its second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, global stock markets were mixed, while U.S. large-cap growth stocks continued to march to their beat. The U.S. small-cap stocks were slipping, and international stocks were staying afloat. Economic growth in the U.S. has been resilient, while Europe and Japan have been lackluster. Against this backdrop, the Small Cap Strategy fell about 3.8% (gross) / 4.0% (net), in the quarter compared to a 3.28% and 3.64% decline for the Russell 2000 Index and Russell 2000 Value Index. FMI Large Cap Strategy decreased almost 0.2% (gross) / 0.3% (net) compared with a 4.28% gain and a 2.20% Decline for the S&P 500 and iShares Russell 1000 Value ETF, respectively. The FMI All Cap Equity dropped approximately 0.4% (gross) / 0.6% (net), compared with a 3.12% gain for the iShares Russell 3000 ETF. Finally, the FMI International Strategies declined about 1.4% (gross) / 1.6% (net) on a currency-hedged basis and 2.2% (gross) / 2.4% (net) on a currency-unhedged basis. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Fiduciary Management Inc. highlighted stocks like Ryanair Holdings plc (NASDAQ:RYAAY), in the second quarter 2024 investor letter. Ryanair Holdings plc (NASDAQ:RYAAY) provides scheduled passenger airline services. One-month return of Ryanair Holdings plc (NASDAQ:RYAAY) was 0.90%, and its shares gained 8.90% of their value over the last 52 weeks. On July 12, 2024, Ryanair Holdings plc (NASDAQ:RYAAY) stock closed at $119.48 per share with a market capitalization of $26.949 billion.
Fiduciary Management Inc stated the following regarding Ryanair Holdings plc (NASDAQ:RYAAY) in its Q2 2024 investor letter:
"Ryanair Holdings plc (NASDAQ:RYAAY) is Europe’s largest airline by passenger volume (~20% market share). It employs a very simple, yet unique business model. It flies only point-to-point, books flights almost solely through its website/app, heavily utilizes secondary airports, flies a single-variant fleet, and has a widespread geographic distribution (40 countries and 96 bases), which helps mitigate the impact of strikes or unfavorable regulations that occur in a single geography. Ryanair is one of the only international airlines to post high growth and stellar returns through a full cycle, owing mostly to the company’s obsessive focus around efficiency and agility. Ryanair has created a deep cost advantage that allows it to price fares at levels that would be unprofitable for the vast majority of peers, leading to continued market share gains. The current industry setup is favorable, as the European in-service short-haul fleet is in short supply. Elevated storage rates are unlikely to revert due to aircraft age and restoration costs. Additionally, there are supply chain challenges and large backlogs that are limiting the pace of delivery of new planes. Ryanair’s mid-single-digit capacity growth is locked in through 2034. Recently, its fares have been a bit softer than expected due to a weak consumer in Europe, and capacity hasn’t expanded as quickly as expected due to Boeing delivery delays. We view both issues as transitory in nature. Valuation is well below historical averages and is likely to recover over a 3-5 year time horizon."
A Boeing 737 aircrafts parked in an airport terminal with passengers awaiting to board.
Ryanair Holdings plc (NASDAQ:RYAAY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Ryanair Holdings plc (NASDAQ:RYAAY) at the end of the first quarter which was 26 in the previous quarter. While we acknowledge the potential of Ryanair Holdings plc (NASDAQ:RYAAY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Ryanair Holdings plc (NASDAQ:RYAAY) and shared the list of best airline stocks to buy for 2024. Ryanair Holdings plc (NASDAQ:RYAAY) is in 10th position on the list. Artisan Value Income Fund added Ryanair Holdings plc (NASDAQ:RYAAY) to its portfolio in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.