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August 23, 2012

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Not so Scary
US Air (LCC,$LCC) Makes Move US Airways Group, Inc. (US Airways Group) is a holding company whose primary business activity is the operation of a network air carrier through its wholly owned subsidiaries, US Airways, Piedmont Airlines, Inc. (Piedmont), PSA Airlines, Inc. (PSA), Material Services Company, Inc. (MSC) and Airways Assurance Limited (AAL). MSC and AAL operate in support of the Companys airline subsidiaries in areas, such as the procurement of aviation fuel and insurance. It has hubs in Charlotte, Philadelphia and Phoenix and a focus city in Washington, D.C. at Ronald Reagan Washington National Airport (Washington National). During the year ended December 31, 2011, it offered scheduled passenger service on more than 3,100 flights daily to more than 200 communities in the United States, Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America. It also has an East Coast route network, including the US Airways Shuttle service. Our proprietary valuation and forecast models have been favoring airline stocks in the Transportation Sector recently. US Air is the latest pick for both our VE View and VE Forecast 16 MNS newsletter. Since we rebalanced for the month, the stock is up more than 17%. Analysts like the stock lately due to a round of rate increases which seem to have stuck. ValuEngine has issued a BUY recommendation for US AIRWAYS GRP on Aug. 22, 2012. Based on the information we have gathered and our resulting research, we feel that US AIRWAYS GRP has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE P/E ratio, momentum and price/sales ratio.

Based on available data as of Aug. 22, 2012, we believe that LCC should be trading at $13.25. This makes LCC 13.83% undervalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For LCC, we base this on actual earnings per share (EPS) for the previous four quarters of $2.34, forecasted EPS for the next four quarters of $3.46, and correlations to the 30- year Treasury bond yield of 2.91%. ValuEngine Forecast
Target Price Expected Return 1.98% 3.75% 6.43% 8.04% 8.97% -1.31%

1-Month 3-Month 6-Month 1-Year 2-Year 3-Year

11.65 11.85 12.15 12.34 12.44 11.27

Valuation & Rankings


Valuation 1-M Forecast Return 12-M Return Sharpe Ratio 5-Y Avg Annual Return Volatility Expected EPS Growth Market Cap (billions) Trailing P/E Ratio Forward P/E Ratio PEG Ratio Price/Sales Market/Book Beta Alpha 13.83% undervalued 1.98% 122.18% -0.2 -19.94% 100.81% 47.94% 1.85 4.89 3.3 0.1 0.14 3.63 0.98 0.97 Valuation Rank 1-M Forecast Return Rank Momentum Rank Sharpe Ratio Rank 5-Y Avg Annual Rtn Rank Volatility Rank EPS Growth Rank Size Rank Trailing P/E Rank Forward P/E Ratio Rank PEG Ratio Rank Price/Sales Rank Market/Book Rank Beta Rank Alpha Rank 65 99 98 45 30 12 73 79 98 99 98 92 25 58 98

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Market Overview
Summary of VE Stock Universe
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 60.44% 39.56% 26.85% 13.41%

Sector
Aerospace Auto-Tires-Trucks Basic Materials Business Services Computer and Technology Construction Consumer Discretionary Consumer Staples Finance Industrial Products Medical Multi-Sector Conglomerates Oils-Energy Retail-Wholesale Transportation Utilities

Change
-1.20% -0.65% 0.65% -0.67% -0.28% 0.07% -0.47% -0.18% -0.14% -0.45% 0.44% -0.39% -0.14% -0.18% -0.51% -0.39%

MTD
2.25% 4.82% 6.45% 1.99% 4.17% 5.33% 2.31% 3.21% 6.34% 2.42% 3.49% 3.02% 3.60% 1.94% 0.70% 0.87%

YTD
2.48% 4.19% 1.02% 6.42% 7.22% 87.55% 14.19% 13.99% 21.50% 2.59% 16.67% 10.80% -6.44% 13.40% 8.68% 1.74%

Valuation
3.86% undervalued 9.88% undervalued 7.78% undervalued 1.72% undervalued 5.92% overvalued 5.40% overvalued 0.50% undervalued 9.14% overvalued 8.32% overvalued 1.66% undervalued 5.50% overvalued 5.42% undervalued 2.14% undervalued 5.27% overvalued 1.17% undervalued 13.60% overvalued

Last 12MReturn
4.35% 4.30% -26.35% 12.66% 4.08% 25.70% 8.63% 7.73% 13.79% 3.83% 5.05% 14.56% -8.46% 20.19% 1.36% 6.78%

P/E Ratio
22.88 17.61 26.7 23.83 42.53 29.91 28.25 19.45 19.16 22.56 41.14 15 36.47 24.95 17.94 18.24