Foolish Feature, 05/07/98: Stock Ideas for Mom! - TMF Rockie gives Herself Southwest Airlines

1998 Stocks for Mom
May 07, 1998

TMF Rockie Gives Herself a Gift
By Sharon L. Hegeman ([email protected])

Southwest Airlines
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P.O. Box 36611
Dallas, Texas 75235-1611
http://www.southwest.com
$26 1/2 as of May 5, 1998

Once upon a time... in a far off land called Texas, there was an oh so young, oh so Foolish avionics secretary named Sharon (better known to her fellow colleagues as "Step & Fetch") who happened to be oh so broke, in her oh so early twenties, working ever so diligently for a small general aviation airport.

One fine hot summer day into her aviation life, in walks (or should we say barrels) a loud, scruffy, seat-of-your-pants flying, Beech18 airmail pilot named Dick. Little did she know that day what an influence "Pilot Dick" would have on the rest of her life. (See Dick fly. See Sharon fly with Dick. Sharon + Dick = LUV.)

As fate would have it, here we are, 24 years later. "Mom" TMF Rockie and "Dad" Captain Dick, with two little mailbags of our own (Haley and Graham) added to our financial list. A financial list that is growing daily with thoughts of college for the kids and a retirement plan for Captain Dick. Retirement will hit Dick in five years, college for our firstborn will hit us in seven years, and college for our second will strike once more in 11 years.

How will we make it work? LUV... Southwest Airlines. What a fine company for the Hegemans to be associated with and have a vested interest in. Yes, we are stockholders in a company that Fortune magazine recently named the best company to work for in America. A company that also ranked number one in Money magazine's first rating of the major United States air carriers in 1997, based on safety, price, ontime performance, baggage handling, and customer service. Southwest Airlines is the nation's low-fare airline that primarily serves shorthaul city pairs, providing single class air transportation. At year-end 1997, Southwest operated 261 Boeing 737 aircraft and provided service to 52 airports in 51 cities domestically.

I am speaking from the heart here, I am an emotional investor, a "Mom" investor, a novice investor, and best of all…an extremely FOOLISH investor. Tom and Dave Gardner have given me the incentive to invest for myself, to take charge of my investing destiny. It doesn't matter that I am a stay-at-home Mom or that I am already 45 years old. Do the math, do the research. Doesn't take a rocket scientist to figure out what is a good steady investment, a slow growing steadfast investment, an investment that will send my kids to college someday, an investment named Southwest Airlines. Give me a choice of mutual funds or LUV shares through our yearly Southwest Airlines profit sharing, which choice do you Foolishly think I will make?

Southwest Airlines consolidated numbers from 1997
(dollars in thousands except per share amounts)

Operating revenues                $3,816,821 
 Operating expenses                $3,292,585 
 Operating income                    $524,236 
 Operating margin                       13.7% 
 Net income                          $317,772 
 Net margin                              8.3% 
 Net income per share, basic            $1.45 
 Net income per share, diluted          $1.40 
 Stockholders' equity              $2,009,018 
 Return on average 
    stockholders' equity                17.4% 
 Stockholders' equity 
    per common share out.               $9.08 
 Revenue passengers carried        50,399,960 
 Revenue passenger miles           28,355,169 
 Available seat miles              44,487,496 
 Passenger load factor                  63.7% 
 Passenger revenue yield per RPM       12.84c 
 Operating revenue yield per ASM        8.58c 
 Operating expenses per ASM             7.40c 
 Number of employees at year-end       23,974

Five-year cumulative total return among Southwest Airlines, S&P 500 Index, and S&P Transportation Index

            1992   1993   1994   1995   1996  1997 
 Southwest 
   Airlines 100.00 190.29  85.41 117.49 112.57 189.33 
 S&P 500    100.00 110.04 111.56 152.47 188.47 249.05 
 S&P Trans  100.00 119.03  99.87 138.50 159.18 204.96

Next: Check out the Mother's Day 1997 Results

* A Stock for Mom represents the opinion of one Fool and in no way should be taken as the opinion of either the Motley Fool, Inc., the company in question or representative of anyone or anything else other than that specific Fool's thoughts.