With Restrictions Lifting, We Believe Air Canada is Ready to Take Flight! 🔥🛫(DD)

We all know what Air Canada does. They are the number one airline in Canada and most importantly, are “non bankruptable” since we as taxpayers will always bail them out. After Covid hit, the company fell 82% and since the bottom the company is up 118%. It is my opinion that Air Canada is still undervalued since pre pandemic levels. It has been trading in a $10 range (From $20-$30) for the past year and with restrictions lifting I see a bullish sentiment entering the sector. With that sentiment my fellow strattonites is a potential to make absolute BANK 🏦 . Bullish aspect #1: Management CEO: Micheal Rousseau, Mikey has only been CEO of air Canada for a little over a year. He has been with Air Canada a long time however and was there through the company's success and it’s failures. I think my boy mike is a bit of a traditional boring CEO which is what this company needs after quarters of going into the negative due to Covid and not bad business practice. This past quarter, Air Canada has become profitable for the first time in the past 5 quarters. Rousseau has lots of experience with Air Canada, and running a company in general. He had been Chief Financial Officer of Air Canada from October 22, 2007 until February 15, 2021 and served as its Deputy Chief Executive Officer from January 1, 2019 until February 15, 2021. He has oversight for several important corporate initiatives and businesses including Air Canada Rouge, in addition to his responsibilities for the airline's overall financial strategic direction comprising all aspects of financial reporting and planning, investor relations, treasury and controller's operations, taxation, pension administration, internal audit, procurement and corporate real estate. Bullish aspect #2: Market Sentiment (Conditions) As we know in Ontario, Douggie is uplifting restrictions and mandates as of March 21st. What does this mean for Air Canada? People will feel more comfortable traveling with less restrictions!! The process to travel will now be less expensive (Don’t need covid tests), and will also become more convenient. With more people willing to travel means more revenue for Air Canada. Just take a look at its trend before this pandemic existed. With COVID turning into your basic respiratory illness, the uptrend should return shortly. People haven’t traveled in years as they were worried about the pandemic, and I am sure they are as eager as I am to leave our cold Country. Bullish aspect #3: Future Outlook -Earnings vs Savings Rate: AC is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.6%). -Earnings vs Market: AC is forecast to become profitable over the next 3 years, which is considered above average market growth. -High Growth Earnings: AC's is expected to become profitable in the next 3 years. -Revenue vs Market: AC's revenue (28.2% per year) is forecast to grow faster than the Canadian market (5% per year). -High Growth Revenue: AC's revenue (28.2% per year) is forecast to grow faster than 20% per year. -Undervalued: According to the 2 stage Free Cash Flow to Equity Model, Air Canada is worth $160 per share: Total Equity Value = Present value of next 10 years cash flows + Terminal Value = CA$21,177 + CA$36,127 CA$57,303.78 // Equity Value per Share (CAD) = Total value / Shares Outstanding = CA$57,304 / 358 CA$160.13 // In conclusion, with the market signaling a potential rotation into the travel sector, what better investment to make than the #1 airline in Canada. With the math also stating that the company is undervalued, I am looking to add more to my current position for the long term. I hope this DD gave you some valuable information and may we bank together🙌 Position: 150 AC.TO @ $21.11 Technical Analysis: Needs to hold above $19.3 for the setup to stay valid

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With Restrictions Lifting, We Believe Air Canada is Ready to Take Flight! 🔥🛫(DD)

bullish

We all know what Air Canada does. They are the number one airline in Canada and most importantly, are “non bankruptable” since we as taxpayers will always bail them out. After Covid hit, the company fell 82% and since the bottom the company is up 118%. It is my opinion that Air Canada is still undervalued since pre pandemic levels. It has been trading in a $10 range (From $20-$30) for the past year and with restrictions lifting I see a bullish sentiment entering the sector. With that sentiment my fellow strattonites is a potential to make absolute BANK 🏦 .

Bullish aspect #1: Management

CEO: Micheal Rousseau,

Mikey has only been CEO of air Canada for a little over a year. He has been with Air Canada a long time however and was there through the company's success and it's failures. I think my boy mike is a bit of a traditional boring CEO which is what this company needs after quarters of going into the negative due to Covid and not bad business practice. This past quarter, Air Canada has become profitable for the first time in the past 5 quarters.

Rousseau has lots of experience with Air Canada, and running a company in general. He had been Chief Financial Officer of Air Canada from October 22, 2007 until February 15, 2021 and served as its Deputy Chief Executive Officer from January 1, 2019 until February 15, 2021. He has oversight for several important corporate initiatives and businesses including Air Canada Rouge, in addition to his responsibilities for the airline's overall financial strategic direction comprising all aspects of financial reporting and planning, investor relations, treasury and controller's operations, taxation, pension administration, internal audit, procurement and corporate real estate.

Bullish aspect #2: Market Sentiment (Conditions)

As we know in Ontario, Douggie is uplifting restrictions and mandates as of March 21st.

What does this mean for Air Canada?

People will feel more comfortable traveling with less restrictions!! The process to travel will now be less expensive (Don't need covid tests), and will also become more convenient. With more people willing to travel means more revenue for Air Canada. Just take a look at its trend before this pandemic existed. With COVID turning into your basic respiratory illness, the uptrend should return shortly. People haven't traveled in years as they were worried about the pandemic, and I am sure they are as eager as I am to leave our cold Country.

Bullish aspect #3: Future Outlook

-Earnings vs Savings Rate: AC is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.6%).

-Earnings vs Market: AC is forecast to become profitable over the next 3 years, which is considered above average market growth.

-High Growth Earnings: AC's is expected to become profitable in the next 3 years.

-Revenue vs Market: AC's revenue (28.2% per year) is forecast to grow faster than the Canadian market (5% per year).

-High Growth Revenue: AC's revenue (28.2% per year) is forecast to grow faster than 20% per year.

-Undervalued: According to the 2 stage Free Cash Flow to Equity Model, Air Canada is worth $160 per share:

Total Equity Value

= Present value of next 10 years cash flows + Terminal Value

= CA$21,177 + CA$36,127

CA$57,303.78 //

Equity Value per Share (CAD)

= Total value / Shares Outstanding

= CA$57,304 / 358

CA$160.13 //

In conclusion, with the market signaling a potential rotation into the travel sector, what better investment to make than the #1 airline in Canada. With the math also stating that the company is undervalued, I am looking to add more to my current position for the long term. I hope this DD gave you some valuable information and may we bank together🙌

Position: 150 AC.TO @ $21.11

Technical Analysis:

Needs to hold above $19.3 for the setup to stay valid

read-time
3 min
30.00
Target Price
9/ 10
Confidence
1-2 Months
Timeframe
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Earnings Release
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News
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SEC
Filing
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Sentiment
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