Air Canada (AC.TO)

This has been strong; not only because of oil prices, but because of some cost reduction initiatives where they’ve been expanding their fleet of Boeing 777’s where people are crammed in like sardines. Have just had the start of the rollout of the Boeing Dreamliner, which has much lower fuel consumption, along with Rouge where they’ve had some cost reductions as well. Stock has been pretty strong this year, but is still trading at a discount to WestJet (WJA-T) and its US peers. If you are a bear on oil, this is not a bad bet.

(A Top Pick Jan 15/14. Up 36.26%.) Energy price is obviously one of the big catalysts here because 1) it is their highest input cost and 2) if consumers have extra cash from saving money on gasoline and heating, there is a chance they are probably going to fly more. The biggest risk obviously is still their debt level.

Has done quite well over the last 18 months. Energy costs are one of its pluses, but also we have had some fairly decent economic growth for the consumer. Consumer discretionary is an area where he thinks firms are well positioned.

Investing in airline stocks has been tough. All the winds are at their back now. They have low oil prices and record load factors. This is the sweet spot for the airlines. If you own, he would Hold to see what you get next. Maybe put a trailing stop behind it if you are worried about it.

Doesn’t really like owning airline stocks, but this one has done extremely well and should be quite a beneficiary of lower fuel prices, which constitutes a good portion of their costs. The multiples are fairly high now. The expansion is going to have to be awfully successful to justify current multiples. Doesn’t like industries that are so capital intensive and highly unionized as this company is.

Has moved a long way already. Momentum could take it higher. Oil prices, depending on how much they hedged, could add to the bottom line. However, the market is very competitive and other companies will be fighting them tooth and nail to put people in their seats.

(A Top Pick Jan 15/14. Up 25.39%.) Still likes. Obviously energy is a huge tailwind for them. For every $0.01 that jet fuel drops, it falls right to the bottom line. Have also been doing other things. Introduced a baggage fee, which is great from a profitability standpoint. Figured on some things with their unions and from a pension standpoint. If oil prices start to slow down the economy, that will have an impact on them. Analysts continue to revise their target prices up based on their earnings estimates for next year and the year beyond.

A very leveraged play. She doesn’t tend to invest in airline companies, and considers them more of a trade then an investment. This has benefited from lower jet fuel prices. Traffic growth has actually been very strong in Canada, despite Canadian airlines adding capacity. If energy prices start to stabilize and go back up to the $80 level, you will start to see this stock start coming off.

Historically the airline industry has taken more money out of people’s pocket than it has put in. In other words, we have booms and we have busts. This airline has improved significantly. If suddenly the price of oil decides to bounce back up, airline stocks would probably crash the next day. You have to recognize that this is a volatile area.

Not a big airline fan generally speaking, but you do occasionally get opportunities for trades. Doesn’t think the airline stocks have reacted that strongly yet to the drop in oil prices, so he would say there is still a trade here. For somebody looking for a 90 day trade where they could make 10%-20%, this would be a good one, but that is not his style of investing.

Have done a very good job over the last few years in terms of cutting their costs, getting their earnings up and rectifying a lot of the problems that they did have. Lower oil prices will obviously help them. This is one that you should just buy for a trade and not hold for something like 3 years, as a lot of low hanging fruit has already taken place for them.

(A Top Pick Jan 15/14. Up 12.36%.) Still likes. Continue to have nice earnings reports. Just announced a baggage fee, which drops money to the bottom line. Have a lot of positive things working in their favour.

This is a company that he has never owned. Doesn't like airline stocks. There is way too much cyclicality for him. This has done well over the last couple of years, but there are some headwinds with it. He likes something that you can buy and hold for several years, and that is something you cannot do with an airline.

He likes this. Had been a great performer last year. Fuel prices have pulled back 18%-20%, routes are full and demand is strong. There is pricing power, pricing differentiation with Rouge and other things that will allow it to go after other travelers. Thinks it has been oversold. (See Top Picks.)

Flights are full, fuel costs are down 20%, the pension plan is fully funded, and the economy is recovering. The only question he has is, how much better can it get. In addition to that, they have started charging for extra baggage, which is a great positive for corporate cash flow earnings. Too volatile for him. He has tended to avoid this type of stock over the years.