It’s easy to remember that Air Canada (TSX:AC) stock traded above $50/share at the beginning of this year. But with the company’s share price now hovering around a 70% decline from its peak, at the time of writing, investors focused on value may be enticed to take a deeper look at Air Canada right now. This is even despite the obvious headwinds at play for airlines in general due to government-mandated restrictions related to the coronavirus pandemic.
The positive news for investors is that Air Canada has been pleading with the Canadian government to begin allowing international flights. A significant amount of Air Canada’s revenue is derived from long haul flights. Should the government ease border and quarantine restrictions, we could see the potential for material share price appreciation in the near term as investors are largely now placing bets on how long this economic recovery will take and specifically how long it will take to get back to pre-COVID levels in terms of previous passenger capacity metrics.
The sooner airlines begin flying and international borders open up to pre-pandemic status, the better the outlook for airlines such as Air Canada. This airline does have excellent operating fundamentals and one of the best balance sheets of one of its North American peers. However, sector-specific worries have shrouded this value pick for the time being. Thus, investors bullish on a quick economic recovery ought to look at stocks like Air Canada today and think about nibbling at this current level and on any dips moving forward.
Invest wisely, my friends.
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