Air Canada (TSX:AC) has remained one of the best value plays on the TSX over the past year, despite increasing by more than 140% over the past 12 months and 60% year-to-date.
One of the best performers among its peers, Air Canada remains undervalued with significant upside potential. In this article, I will discuss why I believe Air Canada is likely to continue to outperform WestJet Airlines Ltd. (TSX:WJA) over the next 12 months, and why the run in the Canadian airline industry is likely to continue for some time.
Looking purely at the fundamentals for Air Canada, we can see that Canada’s largest airline is undervalued looking at most major valuation multiples compared with both Canadian and American peers. With a dominant position in the Canadian airline industry, Air Canada has traditionally been looked to as a proxy for the airline industry in Canada, representative of consumer spending and travel trends among Canadians.
The recent purchasing spree of the airline industry by iconic investors such as Warren Buffett have sparked renewed interest in an industry which has long been looked to as a very volatile and risky industry to invest in.
Indeed, even Warren Buffett himself has denounced the airline industry in the past and vowed never to invest in this domain again. Never is a strong word, and as it is with many things in life, some opportunities are simply too good to ignore.
In this case, I would recommend investors take a deeper look at Air Canada compared to WestJet and all other major U.S. airlines to see how good this opportunity is right now.
Invest wisely, my friends.
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