Westjet Airlines (WJA.TO)

Lower oil prices are largely into the prices of the airline stocks. The PE is at 6 so it seems like a good bet here.

West Jet (WJA-T) or Air Canada (SC-T)?Has never liked the airline industry because there are just too many variables that can’t be understood easily. If he had to choose one or the other, he thinks it would be Air Canada because it is not as domestically related.

She generally does not buy airlines. Air travel is a secular growth area. She prefers suppliers into the airline companies. Airlines are not passing oil prices through to consumers. They are expanding capacity both domestically and internationally. If we see a slowdown in Canada, then we will see their profits drop.

He owned AC-T. WJA-T is getting punished by the weak Canadian dollar and their exposure to the west. Both added capacity. Valuation is starting to make it look quite interesting. You could start to put it away here. You get paid to wait.

This is a great business in a lousy industry. There are 3 or 4 airlines around the world that consistently make money for shareholders and build value. It is a really well run company. They are the low cost provider. The stock is cheap because business is weak in western Canada. Below $20 it is a table pounder.

Has found airlines to be very volatile in the past, but obviously missed some good opportunities. Doesn’t see the environment changing that dramatically. The Cdn$ has hurt them with fewer people flying to foreign destinations. He expects it has now had the worst of its corrections, so it would be okay to buy a little of this now.

This has been a frustrating stock. It has been cheap for a while. Price momentum has been the problem. Airlines in general have come off recently, in part because of fears of terrorism. This airline has been affected by a slowdown in their core western market. They beat their earnings and are trading at 7X PE and 3X EBITDA. It scores in the top 2% for him on valuation. He is happy to hold it.

Short. (A pairs trade with a Long on Allegiant Travel (ALGT-Q). Put this on last February. Had felt that too much was priced in for the decline in jet fuel prices. They are facing a lot of headwinds including a weaker Cdn$ and that jet fuel is purchased in US$. Thinks there will be a launch of a new ultra low cost carrier in 2016 out of western Canada. Also, have the competition from Air Canada’s (AC-T) Rouge. Dividend yield of 2.6%.

Really likes the stock. A great management theme. Thinks it sold off because it was wrapped up in the “sell Canada because it is going into recession” trade. The reality is that the airline sector is a duopoly. This and Air Canada (AC-T) are well positioned to capitalize on any economic growth that Canada has. A great entry point if you have a 1-2 year timeframe.

(A Top Pick Oct 29/14. Down 19.17%.) Sold his holdings. Had recommended this when energy prices were trending down. The issue is that they had had a nice run at that point and probably he was a little bit too late in the game.

(Top Pick Oct 29/14, Down 22.56%) He was late into the name. Good management and they are expanding internationally. Airlines have been out of favour for 6 months so he has been exiting.

It has not done well. It is not that they aren’t growing profit, but Canadian airlines are growing capacity beyond actual industry growth. She doesn’t typically invest in this area.

Just came out was some weak load factors; traffic growth is not keeping up with capacity growth. A number like this might cause some concern. He prefers Air Canada (AC-T) which trades at a lower valuation multiple and has much more exposure internationally.

This has had a better history than Air Canada (AC-T) in terms of managing their costs and in profitability. However, it has not been outperforming as it normally does, because it essentially is out west, so it is perceived as a company that caters to Western provinces. Those companies that deal in oil/gas would be under pressure.

When looking at airlines you have to look at the economy and what is happening to it. There is a lot of uncertainty surrounding the Canadian economy. He would prefer some of the US airlines such as Southwest Airlines (LUV-N).