Air Canada (AC-T)

Does not own shares.
Very tough business with high costs.
Recession will not be good for travel industry.
Would not recommend buying. 

They have gone bankrupt twice in the past. With airlines you must buy at the right time in the cycle and now is a good time to buy Air Canada with a 24% growth EPS. It now has a better balance sheet and is much cheaper than its U.S. peers. Margins should do better. Cost inflation is a concern

Worth $50 a share, but they put on $15 per share of debt. His target price is the low $30s. Seeing incredible recovery in cashflows, though it depends on how long the post-recovery boom lasts. Well managed. Canada's economy will be growing faster than others.

The airlines have been hit hard but the stocks are still down despite the recovery in travel. He owned it but has switched to another airline stock - see Top Picks. It still has upside but results can be a bit spotty.

Not a very good business for investors.
High capital costs with low margins.
Not a great investment.
Would avoid.

Great pricing power, especially here in Canada. Cost headwinds. People are travelling more. Great job on service quality. A difficult, cyclical business long term. 

Looks great. Fundamentally, looks attractive. Looking at the chart, next target is just above $21, and then $24.50 after that. Another 10-20% upside from these levels.

Longer term trend is down. Airlines are very cyclical. He believes we're in a new 4-year cycle with upside until late 2025/early 2026. A lot of the cyclicals should participate. If energy remains in a range, at least it won't be a headwind for airlines.

Very strong brand. Airlines are historically difficult businesses: capital intensive, huge fixed costs, unions, commodity pricing, government regulation. It doesn't have impressive profitability, high ROE, or strong balance sheet. He'd be open to buying if the metrics changed.

Air Canada enjoys a monopoly in Canadian air travel. Yes, there’s Westjet and some discount carriers, but realistically, AC is the only ballgame here. In the first four months of 2023, AC-T sunk 2.2% while leading U.S. carrier, American Airlines, climbed over 7%. AC trades at a nosebleed 2.41 beta and $-4.88 EPS. Its P/E is a N/A, meaning its stratospheric, and it offers a one-year return of -17.6% and -21.16% over five years. Read Travel winners & losers for our full analysis.

Airline traffic has recovered from Covid. Not quite at 2019 levels, but on the way. International traffic is a big driver and is rebounding. New planes are more efficient. Paying down debt acquired during Covid will strengthen balance sheet. Economy will be strong and benefit AC.

His colleagues says that if AC can't make money in this environment, when can it? In this environment, revenue seems reasonable. Jet fuel costs have come down, so that might be a tailwind. Extremely tough sector. He focuses on other names in that space in the industrial sector, such as CAE or HON.

Stay clear. Better financial shape than previously, but still very highly leveraged. B-rated credit, which is deep into junk. There will be a reckoning when they come to refinance. High beta. Cyclical. Business travel won't be the way it was. Consumers tightening belts will dampen demand. Intense competition.

Wage costs and oil costs are beyond the control of airlines. Have high cyclical risk. The economy is slowing, perhaps a recession, so avoid this sector.

It's consumer discretionary and we're heading into a recession. Lord knows what'll happen to fuel prices. Too many unknowns. Ottawa is limiting flights into Pearson to relieve that airport's congestion. Flying AC is very less pleasant now and frustrating.

Shares recovering with passing of Covid-19 and travel recovery.
Recent pullback presenting a good buying opportunity.
Expecting further growth to be muted with recession fears.
Inflation making costs hard for the company. 
Staffing also an issue with pilot shortage.