Things working for AC.TO I have a position in AC and I'm planning to make it a big one.
- Market focused on next 2-3 years but beyond that the cash flow is incredible
- Demographics are a big tailwind, Boomers traveling
- Return to office will also mean return to business travel
- Competition from discount carriers fading
- Pilot deal likely done
- Economy slowing down for next 12 months but rate cuts will work later
Air Canada did almost $4 billion in EBITDA last year on a market cap of $5.5 billion (and $2.75B inf FCF!). Last quarter was $914m.. $10 billion in debt is not high and 4.5x EV/EBITDA on 2025 numbers gets $42/share. P/E in 2025 at around 4.5x but it all improves in 2028 and beyond.
I think the floor for this stock is $12 and I'd like to load up there but I'll nibble in the medium term because this is a $50 in 2027 or 2028. Everyone knows 2026 is going to suck and 2027 won't be great either because of capex but I can wait.