Air Canada (AC.TO)

The chart is a good example of volatility so it is not for the timid. It is a swing trade candidate. If owned then hold onto it. He is not sure about buying. Medium odds of gaining.

It is very cyclical and rich in the current environment. Try for a short term trade, buying at around $13 to $14 and capping it at $16 or $17. You could write puts if you want.

Frustrating stock. Company missteps, fear of strikes. Travel demand still very high, and that will continue even if consumer pulls back. Stock's already been dealt the majority of pain. Valuation is quite good, sees significant upside even if it goes sideways for a while. No dividend.

A couple of quarters of strong earnings will take care of the stock, and ratification of pilots' deal will also be a catalyst.

On technicals, 200-day MA continues to trend lower, and the stock price is below that. Airlines in general have high debt levels, economic risk, sensitivity to the consumer, fuel price volatility.

He'd rather own a BKNG or EXPE, where there are no capital costs. Or even a cruise line, which has demographics behind it.

The pilot strike would be a big deal and cost AC a lot of money. This is not a good business, highly cyclical and competitive and prone to many things like oil prices. It's a trade, at best. Is cautious. A hold, not buy, until the strike resolves. Stay away from AC.

After buying down, he's still waiting. Needs to sign a deal with their pilots. Travel has been softening across North America, but expects a long recovery in AC. Trades at a 7x PE and cash flow remains okay. 

It is in their aggressive value platform with tight stops. It has broken down some more. He wants to see some confirmation but it is not there yet.

Metrics say it should trade at $35. Depressed because everyone's in the Magnificent 7. Plus, everyone feels we're going into a recession, which he doesn't believe. So it's not fundamentals, it's attitude. Once that sentiment turns, enthusiasm for this stock will come back.

Trades at a lower multiple than US because for years was priced as a duopoly, but now much more competition. Costs are lower in US. Likes it here, very cheap at 5.6x 2025. Profit warning, but says demand still healthy. Balance sheet improving. Growth rates keep coming down, but he still models 5%.

More for risk capital. Airlines are not long-term investments. Sell a put and oblige yourself to own it at $14-15, get paid a nice premium.

Airline business very hard. Would not recommend investing. Too much leverage and cyclical revenues. High capital expenditures also make it hard to earn profits. Travel preferences very fickle among consumers.  

Stock price almost near a floor (good time to buy). However, market cycle moving towards a bad time for airlines. Would not recommend buying. Seeing higher prices going forward (not good for business). 

The last time the balance sheet looked like this the stock price was $50. As the population grows there is more demand now. It trades at 3 or 4 times earnings so is very cheap. Governments are pretty much out of the airline industry globally.      Buy 12  Hold 2  Sell 1

More possible downside from here, as shown by the short-term trough that was taken out recently. Technically, very clear and obvious support below where it is now, generally around $16.50. Wouldn't be surprised if it found support and then bounced around. If it breaks that, get out. 

He owns this in his aggressive trading portfolio.

Not a great investment for many years. Airlines, in general, are a tough business. Huge fixed costs, Boeing issues are restraining capacity. Possible short-term benefit if WestJet mechanics strike, until the strike is settled. 

One of his criteria is the balance sheet. High-yield bond issuer. Still has a fair bit of debt. When he goes to work every day, he has his 5 biggest investment mistakes sitting on his desk -- the common theme was that they each had too much debt.