Is it time to buy Air Canada stock?
Investors are looking for new additions to their portfolio, particularly Air Canada stock. Nowadays, more countries are starting their post-COVID reopening. Will this mean a smooth flight for Air Canada and the entire airline industry?
Let’s start with brief details about Air Canada and its recent actions during the COVID-19 pandemic. We’ll see how these could help the airline recover. Later, you’ll see why it would likely experience shaky growth after the health crisis.
The coronavirus has hit various economic sectors, but they certainly will try to recover. That’s why investors should be on the lookout for these burgeoning industries. Air Canada stock might be one of the options you should consider.
What is Air Canada?
It’s Canada’s largest airline that started on September 1, 1937. Back then, it’s named the Trans-Canada Air Lines (TCA). It also provided air transport for passengers and cargo.
By 1964, TCA became Canada’s national airline. What’s more, it adopted the name Air Canada. Then in 1989, the air transport company became fully privatized.
On July 29, 2016, the OTCQX International Premier listed Air Canada stocks under the “ACDVF.” The shares are traded on the Toronto Stock Exchange (TSX: AC).
Nowadays, Air Canada is one of the 20 biggest airlines in the world. Also, it’s a founding member of the air transport network Star Alliance. You may find its headquarters in Montreal.
How did COVID-19 affect the airline industry?
The coronavirus pandemic caused countries to shut their borders. They wanted to limit the spread of the disease as much as possible. Unfortunately, their economies suffered.
Countries had to close down most businesses. As a result, many people lost their source of income. Meanwhile, those that could remain open barely had any customers.
This was especially devastating for the airline industry. The lockdowns took down almost all air travel. This cut off the main source of revenue for all airlines.
Current events put Air Canada stock on thin ice. They would need government help to survive short term. For long-term growth, all airlines need overseas travel to open soon.
Factors for Air Canada stock growth
Fortunately, more countries like the US are reopening. In response, the Canadian government bailed out its largest airline with $5.9 billion. There were strings attached, though.
In exchange, Air Canada agreed to refund tickets and protect jobs. Moreover, it must continue regional routes and maintain its aircraft orders. So far, the company has complied with the agreement.
On June 10, the airline announced that it would bring back 2,600 workers. Moreover, it gave 40% refunds for tickets. It’s also planning to convert many of its Boeing Co 767s.
This recent turn of events made more investors optimistic about Air Canada stock. Still, there are reasons why the share price won’t take off smoothly.
Risks to Air Canada stock
It might be clear skies ahead for Air Canada. Yet, the same isn’t true for many Canadians. Many of them still don’t have jobs. The unemployment rate flew up to 8.1% in May.
That means 68,000 jobs were lost, with 79% of them in part-time work. Meanwhile, immigrants took greater losses. Their employment dipped by 11% in the same month.
This is bad news for the air transport company. Airlines mainly earn from flights. People must have money to book them. If people have no jobs, they mostly have no money for travel.
What’s more, the travel options are limited. People often flock to certain tourist spots. Sadly, Canadians can’t go to most of them yet. Air travel is still limited despite Air Canada’s recovery.
Let’s say more people rush to the air transport company. Air Canada probably won’t be able to handle the sharp spike in demand. They won’t have enough equipment nor workforce.
If it can’t meet the demand, it won’t take advantage of it. Airlines around the world face a similar problem. As a result, investors might not see enough growth due to restarted air travel.
This would frustrate investors waiting for Air Canada’s stock growth. With so many other factors involved, it’s easy to see why they think twice about buying.
Why should I HODL Air Canada stock?
We may find the best investment approach in the crypto market. Its investors often swear by the HODL (hold on for dear life) strategy. It’s otherwise known as a buy-and-hold approach.
Crypto fans may seem silly with their memes and doggy coins. Yet, the way of the HODL has some merits. People follow it because they believe short-term price movements don’t matter.
They see what cryptos will become in the future. They know that their coins have long-term value. The prices may dip from time to time, but their coins will grow in value soon.
Similarly, you may try this with Air Canada stock. As more countries reopen, it’s chances to recover and grow increase. Your shares may dip a bit, but their prices may increase long-term.
If you don’t want to hold it too long, you may flip it after a few months. People may become more bullish as Canadians initially book flights. You may sell it as the hype simmers down.
Other sectors with good investments
The pandemic isn’t gone yet, so it’s still messing with the global economy. As a result, you see so much volatility in stocks and other assets. This is why it’s best to go for long-term growth.
Certain sectors have a good chance of growing during the pandemic. That’s why their stock prices may increase along with them. Here are some sectors with promising stocks:
- Online learning
- Technology
- Consumer staples
- Healthcare
- Precious metals
- Telecommunications
You may want to follow the rule of thumb of diversification. Choose multiple asset classes that may grow in the long run.
Aside from stocks, you may want mutual funds and bonds too. The latter even provides regular dividends. Still, it depends on the ones you picked and recent events.
Moreover, this might be a great time to get into real estate. Crowdfunding is making it easier for first-timers to invest. Even better, you can begin with just $500!
Related Articles
Final thoughts
As always, make sure you research your options thoroughly. Check numerous sources for market shares and other relevant information before investing.
You may track market data and stock quotes in real-time as well. This may help you determine when to sell your stock, if ever. Note that their information may be delayed at least 15 minutes.
The global economy is still unpredictable due to the pandemic. In response, you should have various types of investments. This lets you minimize risk and maximize profits.
Learn more about Air Canada stock
What are the Air Canada stock predictions for 2021?
Investors are split on Air Canada stock. Bullish folks see the high demand building up for air travel. Yet, some are bearish since the COVID-19 vaccinations are still problematic worldwide.
How did recent events affect Air Canada stock?
On June 7, Prime Minister Justin Trudeau said he plans to welcome international tourists back. The next day, Air Canada stock went from $26.95 to $28.95. It hasn’t moved much ever since.
Will Air Canada’s stock price go up?
It’s hard to tell how it would perform due to the ongoing pandemic. We may see Air Canada stock this year due to recent events. Yet, the next 12 months are still questionable.
Disclaimer: This article is the author’s personal opinion, which may differ from the “official” statements or facts. All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by Inquirer.net constitutes an investment recommendation, nor should any data or content published by Inquirer.net be relied upon for any investment activities.
Usa.inquirer.net strongly recommends that you perform your own independent research and/or speak
with a qualified investment professional before making any financial decisions.
