Air Canada (AC.TO)

Chart looks like the stock is rolling over. There is an intermediate low of around $22, so watch the level very carefully and don't let it go below this. A very volatile stock.

It’s interesting that this stock is falling while US airlines are rising. His guess is that this airline is impacted by rising oil prices. Their largest cost, after labour, is fuel. He would never own the stock, because they have such high capital expenditures that they never generate real growing free cash flow. If he owned this, he would have entry points and exit points. If one of your targets gets hit, you can sell half, or start to find the next the point based on the high multiples in the category.

Historically this was a cyclical business. They’ve sorted out their plane business and pensions. Traffic is going up and oil prices have been low. The story is still here and there is a much bigger chance it is going up rather than down. The real cash flow comes 2 years from now. Delta screens a lot better than Air Canada as it is less expensive. Air Canada is a great story but it is a little ahead of itself.

He likes this, and thinks it can continue to move up. Has almost doubled off is lows in the last year from the $10-$12 range. It’s quite volatile. It could pull back to $15 or go to $35. Its value is substantially higher than what it is. Get on for the ride.

This does very this time of year, when people are doing a lot of flying. Technically, the chart shows this is in a long-term upward trend, recently came down from a high and formed support at around $22. It has resistance at around the $27 level. It has a period of seasonal strength through to the end of December, so stick with it for now.

He was in for a while and it did quite well but if oil goes up it will be hit. He would take profits.

Just reported earnings, which is what started the decline in the stock price, although thinks it had more to do with sentiment and what happened with the actual numbers. He is watching earnings numbers and trends and what happens with them. They basically met their numbers, but after the company reported, the consensus and expectations were so high they ended up disappointing. As the numbers keep getting revised up, expectations get higher and higher. Eventually they hit the numbers, but can't make everyone happy, so the stock price started to sell off. He sold his holdings just before the numbers came out, because it started to break down technically. It probably goes through a period of sideways before the next leg higher, providing earnings are higher.

This has done an incredible job. It used to be a perennial dog, but has been a fantastic performer. There are a couple of notes of caution. The higher energy prices are not positive for them. Westjet (WJA-T) is broadening their offering, which is not great. There is a new airline which will offer more competition. A very capital-intensive business. If she had her way, she would talk them out of paying a dividend.

(A Past Top Pick Oct 25/16, Up 105.33%) It has transitioned to a free cash flow story as they reduced debt. You have to expect continued good news at these price levels.

The Q3 earnings call is this Wednesday. He suspects the results will be good. The only caveat is that we are supposed to get another discount airline in next year and this might have an impact on margins. He would not chase the stock and he does not own any airlines.

Has never owned an airline. This one is certainly in the sweet spot. They’ve come out with all kinds of ancillary airlines, with no unions. Everything is perfect for them with an improving economy. These are deeply cyclical companies. The time to buy this was when they were losing money and the stock was a lot lower. Now they look like a really good company, but in fact they are just a cyclical airline.

Has done very well, but is overbought on the chart. If you own, sell half or a 3^rd, which will improve your average cost and you will be much better protected.

It just continues to exceed expectations here. It looks like the airlines globally are continuing to accelerate their revenue. They figured out a few years ago how to charge for bags and make a tonne of money out of that. They took some capacity out of the service and planes are fuller. They are benefiting from the growing economy and they service global destinations. He would not expect the same rate of increase as in the past year. When airlines top out they will have a big pullback.

2 years ago, the CEO said he was going to build up Rouge to compete at the lower end and Sunbelt as destination markets. Also was going to try to get some US traffic to use Air Canada. There were a lot of sceptics, and the stock didn’t do well for about 6 months, but it is proving out now. The model is working. It is currently hitting a 52-week high and thinks it is going to go higher.

Plugged his nose and bought this a year or 2 ago, because he has Short positions in the airline sector so is using Air Canada for hedging purposes. It had a phenomenal run this year. He would be cautious about adding to it. It should trade closer to its American peers, and is trading at a discount, so he does see some upside.