RE:RE:Air Canada in near termThis stock is very hard to predict and even harder to time. May be, because lot of short interest in this stock. This cycle (managing the company out of a severest recession: capacity down by 90% at one point) will reduce the fear of bankruptcy in investors mind. Infact, by now it should be done. There is no bankruptcy here.
This is the fastest ramp up of capacity Air Canada will see in their history. When you do things second time (first time from 2012-2019), you learn and improvise. Aeroplan and credit card full impact will be seen now. Highest cargo capacity in their history in times when cargo premium is almost 100%. One of the best fleet and highest liquidity ratio at hand. And other factors.
All above will lead to very fast growth in free cash flow (not necessarily EPS but who cares about that) in coming quarters and years.
Let's assume AC produces $300M cash flow in Q4. It would mean simply put ~ $1.2B annually or $3.4/share, using 357M outstanding shares. If AC doesn't use govt money, they can try to cancel the warrants. In that case, the number could be $3.6/share. Airlineinvestor have used 10 as a multipler (could be higher). That puts the sp at $36, lets say in next 2 quarters. No one can predict with precision. Depends on how market responds to it.
I believe that free cash flow will be higher than $300M/quarter in 2022. Mutiplier could be higher once investors get more confident. But, if one waits longer, these prices might not last. It is a risk reward scenario.
My wild guess is that sp could be $30-$32 in next 2-4 months, if AC executes their plan without interruption. We also know from history that AC stock has high ups and downs. Shorts bring it down than it should be and a good news then breaks the stock up in a wild fire.