As far as airlines go, Air Canada (TSX:AC) actually exhibits some of the best fundamentals and balance sheets of its peers. The entire travel and tourism sector has been halted, and though some investors may want to take a stab at picking up shares of airlines such as Air Canada prior to borders opening up, I still see significant potential downside in the horizon.
In this article, I am going to discuss why I think, therefore, that Air Canada deserves a spot on investors’ watch lists rather than their buy lists.
Most analysts see such near-term pain on the horizon. Some are calling for a sector recovery timeline of at least three years to see pre-COVID travel levels proliferate again. This is perhaps a rosy view of the sector, as I believe the travel and tourism industry likely has experienced some structural damage that will either delay or prevent such a recovery timeline from materializing.
We have all now experienced that working from home and having meetings from one’s home office can be as productive, if not more productive, than business meetings requiring round-trip flights and accommodations. This is a trend I expect will continue.
Air Canada fundamentally remains relatively strong and would be on my shopping list once it becomes clear we have made it through this recession and are on the way to a recovery. Until then, I would recommend investors keep this stock on their watch list.
Invest wisely, my friends.
