Airlines are facing mounting pressure from rising jet fuel costs, creating uncertainty around pricing, demand and future earnings forecasts.
BNN Bloomberg spoke with David Dietze, Chief Investment Strategist at Dietze Wealth Management Group, about how higher costs are affecting airlines and where he sees opportunities in undervalued stocks.
Key Takeaways
- United Airlines lowered its 2026 earnings forecast despite beating first-quarter expectations, citing uncertainty from higher jet fuel costs.
- Airlines are raising ticket and ancillary fees and cutting some flights as they try to offset rising fuel expenses.
- The airline sector remains highly cyclical and cost-sensitive, with profitability tied closely to volatile energy prices.
- Albertsons is seen as undervalued with strong regional market positions, steady earnings and a dividend above four per cent.
- Fiserv and Magnum Ice Cream are viewed as overlooked opportunities, trading at discounts with potential for earnings growth and improving investor sentiment.
Read the full transcript below:
ANDREW: United Airlines beat expectations in the first quarter but, as you might expect, cut its 2026 earnings forecast. Let’s get more from David Dietze, chief investment strategist at Dietze Wealth Management Group. David, great to see you. Obviously, the entire airline industry globally is in turmoil with this explosion in jet fuel prices.
DAVID: Yeah, absolutely. So that’s one of the biggest costs that airlines face. And, of course, the types of fuel that they use is not the regular gasoline that people buy at the pump, but refined jet aircraft fuel, which trades at a much higher price. So they’ve been hit very hard, and it’s very difficult for them to make a forecast. United Airlines is very cautious in its forecast because no one really knows how long these energy prices will stay higher. What they’re going to have to do is cancel some flights. Some flights have already been eliminated from the roster, and they’re raising ticket prices and bag fees. To what extent will consumers push back? There’s uncertainty on the top line and, of course, great uncertainty on the cost of fuel.
ANDREW: Right. I’m looking at a five-year chart for United Airlines. The stock’s peak, as far as I can see, was in January at about $117, so it has dropped from that level. What’s your philosophy on buying airlines? Do you like to own them? They’re notorious for leverage and volatility.
DAVID: Yeah, so airlines, historically — you go back to Warren Buffett — he swore to his investors that he would never buy an airline again after problems with a previous investment. So it is a very cyclical industry. It is very asset-intensive. You’ve also got a unionized workforce, and they want their share of the pie as well. I guess the one saving grace right now is a more lenient regulatory outlook. We’ve heard from Transportation Secretary Sean Duffy saying he is open to mergers and acquisitions activity. So some of the better-run, smaller airlines might see M&A interest, which could be very interesting.
ANDREW: You have some stock ideas for us. Can we start off with Albertsons, the grocery company? You say it’s a smaller player but has key positions in crucial markets.
DAVID: Yeah, there are many ways to evaluate supermarkets, but one of the most important is how large they are in a particular geographical area. It doesn’t matter to a Chicago consumer what they’re doing in Denver. Albertsons has some great brand names, including Safeway and Kings, and strong market positions that are difficult to dislodge in many key U.S. regions. What I like about Albertsons — remember Kroger took a run at them a few years ago, but that was stopped by the prior administration. Now we may have more leniency in the supermarket space. You’ve got a $17 stock that should earn more than $2 this year and perhaps another 10 per cent next year, with a dividend above four per cent. They’ve also put the opioid settlement behind them. The number sounds big, but it can be paid over nine years, so I don’t think it will disrupt cash flow significantly.
ANDREW: That’s interesting. Another stock idea you have is Magnum Ice Cream. That just went public as a spinoff from Unilever?
DAVID: Yeah, I don’t think it’s attracted much investor attention, and it doesn’t help that its headquarters are in Europe, but sales are global. They’re best known here for Ben & Jerry’s ice cream. This could be a sweet idea. They have a strong position in premium ice cream and snack offerings and are trading at a significant discount to peers. They don’t currently pay a dividend, which may be keeping some investors away, but they are planning to introduce one early next year. It’s trading at about 13 times earnings, which is cheap for a food stock. Remember, food stocks are down, but that group will rebound. I think Magnum is an interesting way to play that.
ANDREW: And finally, Fiserv, the payments processor. You think this stock is deeply undervalued?
DAVID: Yes. This is about a $63 stock. They should earn roughly $8 this year and $9 next year, which makes it very cheap. They work with about 10,000 financial institutions in payment processing and have significant market share. They had a weak quarter last summer, which caused investors to sell off the stock too aggressively. They’ve brought in new management, which is establishing credibility. This is one of the largest fintech companies trading at a discount. They’ve grown earnings about 25 per cent annually over the past five years, and analysts expect close to 11 per cent growth over the next few years, with strong free cash flow. I think this is a winner.
ANDREW: Thank you very much, David. Really appreciate your joining us.
DAVID: Thank you so much, Andy.
ANDREW: David Dietze, chief investment strategist at Dietze Wealth Management Group.
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This BNN Bloomberg summary and transcript of the April 22, 2026 interview with David Dietze are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
