Caribbean vs. Canada Until the Holland America sojourn, my cruising CV was a single-space page of southern cruises, specifically in the Caribbean. Not to boast, but I could probably name a ships destination based solely on the tours and souvenirs being hawked. Atlantis and conch shells Nassau. Mayan ruins and margaritas Cozumel. Dunns River Falls and Bob Marley dreadlock hats Ocho Rios, Jamaica. The Canadian and New England ports were less self-evident. Sure, I could match the redheaded Anne of Green Gables with PEI and Acadia National Park with Bar Harbor, but the bike trip to Montmorency Falls? Hmm. The puffin nests on Bird Islands? Huh.
Is Air Canada’s Rally Set to Continue?
This helped Delta shares move higher in the days following, as the positive news was eaten up by investors who now view Delta as a safer investment. Its shares likely came under buying pressure from S&P 500-related funds as well. Air Canada was also invited to the S&P/TSX Composite, however,which is much like a Canadian version of the S&P 500. Although there are not nearly as many S&P/TSX Composite funds as there are S&P 500 funds, Air Canada’s presence in the index may increase some funds’ willingness to add shares of the airline. Additionally, investors will now see Air Canada shares in the same index as WestJet shares, decreasing the perception of WestJet as the financially healthy Canadian airline, and Air Canada as the financially unhealthy one. Turnaround at Air Canada Although Air Canada is not the strongest player in the industry, its compelling valuation makes it my top pick in the airline industry. Through a combination of growing earnings, positive industry trends, and shifting investor sentiment, Air Canada shares have more than tripled off oftheir lows last summer. Despite this impressive rally, I view these factors as continuing drivers for shares going forward. Possible risks to this rally include an economic slowdown, more aggressive capacity additions, or a spike in jet fuel prices. Barring any of these situations, I see Air Canada as an excellent value in an industry that is itself broadly undervalued. As with any company, however,investors should watch Air Canada and the airline industry as a whole closely for any positive or negative news that could affect their investments. Warren Buffett has claimed that investing in airlines is a surefire way to lose your hard-earned cash. But two airlines are breaking all the rules by keeping costs low and avoiding direct competition — leading to enviable profits.