Keep an eye on Delta Air Lines (DAL).

After gapping from about $40 to about $28, the stock appears to have bottomed out.  From a current price of $31.75, we’d like to see it refill that bearish gap initially.

Even Citi analyst Stephen Trent appears bullish on the stock.

He notes the pullback went a “little too far,” adding, “This is not 2020.  Delta’s margins and cash flow generation are much better than they were at that time — yet the stock is back at those mid-year levels. There now seems to be a lower bar for Delta to surprise the market positively over the next three months.”

While the DAL stock pulled back after the company missed on revenue and margin targets, free cash flow beat guidance.  In fact, in its most recent quarter, the company generated $1.6 billion in FCF, which beat its own guidance by about $100 million. Better, unit revenue exceeded 2019 levels by 20%, as demand outpaced seat supply.

Plus, at less than $32 a share, DAL appears to be a real bargain – especially as it trades with a PEG of just 0.12, and at less than half of sales.