Gavin Graham Copa Holdings CPA-N TOP PICK Sep 13, 2013

CPA operates over 100 aircraft serving South America.  Pent up air travel demand is leading to an ROE of 35%, while the shares trade at 6x earnings and under 2x book value.  The good dividend is backed by a payout ratio under 30% of cash flow.  We recommend setting a stop-loss at $78, looking to achieve $117 -- upside potential of 28%.  Yield 5.4%

We reiterate this Panama City based airline, operating 110 aircraft on 375 daily flights as a TOP PICK.  We like that quarterly cash reserves are growing once again and air flight demand is growing.  It trades at 6x earnings, under 2x book and supports a 35% ROE.  The dividend is backed by a payout ratio under 30% of cash flow.  We recommend maintaining the stop at $78, looking to achieve $120 -- upside potential of 28%.  Yield 5.4%

We reiterate this Latin American airline as a TOP PICK.  Analysts see demand for air travel continuing to rise, while fuel prices dropped by over 10% on average last quarter -- this should be bullish for their upcoming earnings.  We like that cash reserves are growing as the stock trades at 6x earnings, under 2x book and supports a 35% ROE.  We recommend trailing up the stop (from $78) to $86 looking to achieve $125 -- upside potential of 28%.  The dividend is backed by a payout ratio under 35% of cash flow.  Yield 4.8%  

Copa Holdings, S.A., through its subsidiaries, provides airline passenger and cargo services. The company offers approximately 204 daily scheduled flights to 69 destinations in 29 countries in North, Central, and South America, as well as the Caribbean from its Panama City hub. As of December 31, 2021, it operated a fleet of 91 aircraft comprising 77 Boeing 737-Next Generation aircraft and 14 Boeing 737 MAX 9 aircraft. Copa Holdings, S.A. was founded in 1947 and is based in Panama City, Panama. Social media mentions are up 167% in the past 24h.

We reiterate this Panama based airline for Latin America as a TOP PICK.  Recent data shows the airline utilization rates along with revenue per passenger mile continued to grow last mont.  We like that cash reserves are growing, shares trade at 5x earnings, under 2x book and supports a ROE of 27%.  The robust yield is backed by a payout ratio under 50% of cash flow.  We continue to recommend a stop at $86, looking to achieve $118 — upside potential of 28%.  Yield 7.0%

Our PAST TOP PICK with CPA has triggered its stop at $86.  To remain disciplined, we recommend covering the position at this time.  This will result in a net investment loss of 8%, when combined with our previous guidance.