Air Canada (AC.TO)

They reported earlier today and earnings were very positive. The concern is whether oil prices will continue to go higher. New management will be focusing on reducing debt and attracting new consumers. It is trading at very good valuations. Yield 0%. (Analysts’ price target is $31.30)

Air Canada has turned around smoothly under current management. Good passenger growth and they can add new routes around the world. Fundamentals are dirt cheap. Expects the stock to double in a year, but it's higher risk because it's an airline. (Analysts' price target: $31.63)

He owns no airlines, because there's competition moving in and oil prices are rising.

Has been trading down like WestJet. If it continues its negative trend, it is likely to get to $18.85. Like WestJet, this could rally under the right conditions. He would buy at $18.85, but not now. If it dropped below $18.85, he would sell and buy in again around $15.46.

He feels the transportation sector is entering into a good seasonal cycle and thinks this stock is in a good risk-reward position. The bearish move since March is now testing long term support near $20, so this could be a good place to begin to build a position at these levels. He would use a 5-6% range for a stop-loss.

It is losing altitude. When oil is rising, this is not a good trade. Oil and Labour are their two biggest costs. There is no sign we are tipping into recession but the current expansion is 9.5 years old. Don’t hold this in a recession.

Rarely invests in airlines. Have executed fairly well. They’re seeing big growth internationally. It’s so capital intensive, and little control over price of fuel. There is more competition coming onstream. Oil price increase is a headwind.

Westjet is a well-run company and its stock has had a good run. But over the years lumbering Air Canada has caught up to Westjet which has lost its competitive advantage. AC will do better than Westjet going foward. (He owns AC.)

It's likely benefitting from the current Westjet strike so it should have a good upcoming coming. AC has had a slight pullback, so be careful.

Stay away of the industry. Too cyclical. The amazing thing is that it is trading at an unbelievable low multiple. It had a good run. Looks cheap but could be one of those traps.

It has done very well and will benefit from WestJet’s current labour dispute. However, its price has risen too far for his investing style. Instead, he owns Air Transat but it has also moved up a lot

(A Top Pick Jan 16/17, Up 90.29%) He is happy with it. He still owns it. It is still a cheap stock. It scores in the top 20% on valuation. Traditionally a terrible business, they have rationalized it. Investors can still enjoy the ride.

The company has gone through a remarkable transition, rolling out Rouge and improving the efficiency of their fleet. They have tremendous cash flow and they have to put it to work somewhere. In response to the caller’s question, he comments that they might institute a dividend with all that cash, but he is not sure when. This is a cyclical industry, valuation is high, fixed costs are high and so this is not a company he would invest in.

He thinks the top is around $30. He has a model value of $39.43. It is cyclical so it may not get to this higher level.

(A Top Pick July 10/17 - Up 16%) A name he still owns. Reduced a little bit the weighting. Little bit of a pull back with higher oil prices. He is expecting an OK quarter. He thinks 2018 is going to be a year of catalysts. A noisy story in 2018. The increase in traffic in Canada has been significant for them.