Chorus Aviation Inc (CHR.TO)

Very volatile. September is the best time for airline stocks. Don’t hold this one past April.

Handles some of Air Canada’s regional flights. Their seat capacity agreement with Air Canada has been renegotiated 2 or 3 times. A lot depends on their relationship with Air Canada. Right now, Air Canada is dealing with a lower Cdn$ which impacts fuel and recently rising aviation prices. Leading up to November, the outlook for air travel was quite good, but given those 2 headwinds he wouldn’t have position in this one.

A decent income play, with an outsized yield. He is concerned there is not a lot of capital appreciation from here. The yield is sustainable for at least 12 months.

(Market Call Minute.) Dividend is sustainable. On a risk/reward basis, the payout is quite favourable.

Dividend yielding stock for investment purposes. He had been concerned about the dividend but negotiations with Air Canada worked out. Stock still has a good yield and upside potential. On a price to book basis it is still fairly expensive, but sometimes you have to swallow your gum and go with convention.

We are coming into some pretty significant resistance levels. We will have to see if it breaks it.

The dividend should stay stable but may not increase. In 2020 the contract is over. She doesn’t own it because of this cliff risk.

Just won an arbitration ruling with Air Canada. They get paid a percentage above their controllable costs. It’s going to be a tough business for them. Very volatile name.

(Market Call Minute.) There is a little bit of risk here, especially when their agreement with Air Canada comes up for renewal again.

Chart shows a long downtrend in 2011 followed by base building during 2012, followed by a breakout to the downside. The only encouraging thing he could say right now is that it just put in a low at about $2 and is attempting to break a neckline. If it does break through this, it could be very bullish. Wait for 3 days and watch for volume. Stock doesn’t have a lot of volume, which indicates there is no conviction on it.

Ranks really well. Dividend looks secure. Upside growth is from Air Canada. A good venture point.

They have this contact with Air Canada until 2020. They won’t get the same deal if renewed. Never held it. He looked at it.

12.6% dividend. An interesting company. In dispute with AC.A-T, their only client. They can’t get out of contract for 6 years. If it is resolved in favour of CHR, it will go up, otherwise it will pull back. Thinks they will kill the dividend in the later case. There is a better way to play it. They have a convertible bond with 9% coupon, due in about a year. If the decision goes against them they could still make good on the bond.

Doesn’t really like this stock as there is only one customer, Air Canada (AC.A-T) and they are hell-bent on cutting costs. Even if they don’t get the arbitration decision they want, they’ll find other ways to do it.

He kind of likes the aviation stocks. Yield of 14.7%. He would like to see a positive transit on any of his EBV lines plus 3 which is $2.63. He would be more interested at $2.65.