Air Canada (AC-T)

Was $50 before pandemic, yet financials are virtually the same now as then. Massive upside. Being hit by sentiment left over from pandemic. Continues to tap into the US market. No dividend.

He never owns airlines. AC has failed to generate shareholder wealth creation historically. They take on too much debt, then buy back shares, then raise equity. Avoid. 

Capital structure not great, but company appears to be growing. Capacity to China/Asia growing. Fuel costs coming down. Would recommend buying - price could reach ~$40/share. Overall, is positive on the business. 

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.