Westjet Airlines (WJA.TO)

He is not a fan or airline stocks. It has a nice little trend.

(Market Call Minute.) Running into heavy overhead resistance at about $26-$27. Has potential to about $40. Would prefer Transat (TRZ.B-T).

Has held the stock right from its IPO. This is in a cyclical and very difficult industry. There are a select few of business models globally, that over time consistently make money. Airlines have a few key imports such as fuel, labour and capital costs. People are a very big part of the business, and a really good business model globally, consistently makes money for shareholders with very good relationships with employees. This company ties in their employees with options and profit sharing. His target is $33.

Very interesting company. Doing everything right. Great balance sheet and great management. They are now having the premium economy seating. Getting into more wide bodies. Flying overseas.

Will probably never own it. You only trade airline stocks, rather than hold a long time, because there are so many challenges for airlines. It is currency right now. They have no debt and have a dividend, on the bright side.

Over the long-term, the airline industry has been a very bad sector for investors. This industry, particularly in the US, is going through a great deal of structural change with an immense amount of consolidation and cost-cutting going towards more efficient planes. Less price competition and more rational behaviour. There is some concern about competition and if the good times can keep happening. Prefers Air Canada, but has a positive outlook for both.

He is a firm believer that if you own an airline, it is a Trade only, not a long-term investment. This one has been a good stock to be in, but generally this is a trade only and is very cyclical. Declining Cdn$ hurts their cross-border traffic. Good economies help them. Another thing that has helped them is the consolidation in the North American airline industry in the US. This stock has probably got hurt recently by probably getting overvalued, a weaker Cdn$, but have also gone into a lot of expansion into regional markets. The good days are gone here for now and he would wait for it to stop going down, which doesn’t look like it is happening here.

(A Top Pick Jan 23/13. Up 22.29%.) The valuation of this company versus all the US airlines is very compelling. Still trading at a discount and yet it has high return on capital and better balance sheet. A better run company. If you are going to hold an airline for a long term, this is the one.

Recently came out with earnings that were fantastic. Revenue per mile was down and costs were higher. Declining Cdn$ has hurt them. Have a lot of other irons in the fire. Improving their aircraft and have raised prices. Chart shows a little bit of a pull back and he would be a buyer in this range.

Hasn’t drilled down into this one in great detail but it certainly has an amazing track record. Likes it. Airlines will benefit from this worldwide recovery as long as energy doesn’t go anywhere.

Air Canada (AC.B-T) or WestJet (WJA-T)? The airline model is a highly leveraged model. Very high fixed costs. As revenues go up or expenses are cut, it can create a huge change in earnings. This one is growing nicely with revenues up about 7% for the year. They have less cost-cutting to do so there is less change taking place. They are being helped by fuel prices being muted, which is likely to continue.

Stock has done incredibly well and the company is doing well. The airline cycle is going on and hasn’t been ruined yet by putting on more capacity and irrational competition. We are seeing additional capacity coming on but, so far, the demand is there. It is quite possible that it continues to move up from here.

Well managed company. Nice growth profile. Seem to be doing well and getting traction. Have really dealt well with the capacity issues over the last little while.

This whole industry has been on fire. The way Air Canada is going, he would probably prefer it over this company. This company is doing everything correct. He would be a little wary about buying at these levels.

Airlines have not been good investments over the long run but West Jet is a really well managed airline. However it is a little on the expensive side. He would take the profits and run, since it has had a good run.