Could Airlines Post Record Free Cash Flow in 2015?

In an interview with Stoyan Bojinov of ETF Database, Frank Holmes details the reasons why he was initially attracted to the idea of creating an airline-focused ETF and why he remains bullish on the industry today. He highlights free cash flow as airlines’ “magic factor.”

“Free cash flow is expected to reach a record [industry] high in 2015,” Frank says, “and if you look at individual companies’ free cash flow, three of our four biggest holdings… are expected to have yields above 10 percent this year.”

READ THE INTERVIEW FROM ETF DATABASE

Article summary written by U.S. Global Investors.

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Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. It represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Smart beta refers to investment strategies that emphasize the use of alternative weighting schemes to traditional market capitalization based indices.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.

There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time.

The price-to-earnings ratio, or P/E ratio, is an equity valuation multiple. It is defined as market price per share divided by annual earnings per share.