AC trade ideas
AC| Bounce than DUUMP ?Looking for a bounce on AC, could long to look for shorts or wait for shorts !
AC.TO for the Long RunI am 21 and besides trading , I have set aside a designated portfolio for long term holdings. Stocks to hold up to 30 years. This is why I believe Air Canada is a suitable stock for any retirement portfolio.
1) Current market price is lower than IPO price from 14 years ago.
2) Given the current market price, there’s a return opportunity of 158% or $30 gain per share assuming the ceiling price is the all time high of $50.
3) Canada has a population of less than 40 million people. Given that’s the second biggest country in the world with one of the highest qualifies of life, one can expect lots of immigration, travel, and tourism growth. All good news for the airline industry.
4) Oil prices have never been lower, and that’s another great news for a company who’s biggest operating expense is fuel.
5) Just like the United States government has bailed out United Airlines, the Canadian Government will do the same thing to save the biggest and most prestigious air line in the country. So even if the company goes bankrupt, government bailout is a reality.
Note - I believe the stock price will drop momentarily, and that’s when I’m preparing myself to double my current position.
AC possible Call Option Word is that the Feds are about to step in and give AC a "hand".......you decide....Building Financial Resiliency One Block at a time.....#FranklinCap Hit the "Like" button to see more like this from Franklin Capital...Thanks!
No bail out can help this one.How are you going to implement social distancing in an air plane? All the seat would have to be first class?!
Possibly a long set up in the making.I am expecting the stock price to up go a little bit and then a pullback. After, the real move might take place. Trade with caution!
AC - HS Pattern?Just a prediction, but it looks like AC is capable of making a HS pattern.
If that could be the case, it could mean potential upside target to approx. $18-20 area for the right shoulder high in the short term.
This is if it could keep within the larger upside trend line.
Hopefully it doesn't break 15.70 on the downside. If the HS fails to complete and we break below, it could mean a return to March lows.
Caution: this is just an opinion, do not trade on this. My skin in this is worth a cup of coffee for 2 friends.
Air Canada 1D Chart AnalysisTechnical Analysis of Air Canada 1D Chart
This time we observed an Ascending Triangle pattern with Three confirm bottoms and Two confirmed tops (Triangle in Yellow). The triangle has now broken out of the downward direction with a corresponding higher volume of selling, which almost confirms the new downtrend with technical analysis (shown in Purple). Generally speaking the height of the triangle is what should drop in this instance (Shown in Green).
As we mentioned previously in A&T Corp. we believe in combining Fundamentals with Technical Indicators to place our trades, we will now look at the Fundamentals of Air Canada stocks.
Fundamental Analysis of Air Canada
The company boast a significant Moat in the Canadian Air space, however, due to current COVID-19 situation the airline is draining cash rapidly.
Latest earnings have revealed Air Canada lost over $1.0 B in the first quarter of 2020. Now, keep in mind that only the last 15 days of March were the most significant in terms of trouble due to Canadian Governments asking of travel bans. That means only 15 days out of the 90 days caused the majority of the problems.
In the 2nd Quarter we can expect another significant blow to the company's balance sheet but this time with 90 days of shut-downs. However, due to lay-offs and parking of jets the company managed to do some damage control in terms of draining cash. So we do our math as the following:
Given,
15 days = $1.0 B loss
Therefore,
next 90 days = $6.0 B loss, however, due to stopping flights and massive lay-offs this will be significantly reduced. Therefore, we say it's only 1/3 of the estimated.
or, next 90 days (Strict measures) = $2.0 B in losses.
By the time 2020 is over the company will loose it's cash pile of over $5.0 B and will be sitting on a pile of $9.0 B (Current liabilities). The book value will be reduced down close to $0.0 or may be even negative.
Additional Notes:
Once, lock down eases throughout Canada, we cannot expect people to travel around freely and go back to normal. This will still continue to impact the airline industry with reduced travelling from Tourism and Businesses . Now, we all may know that Business class passengers are the ones that makes money for the airline companies and with them at home (Using Zoom) the flag carrier will continue to hurt badly.
Our estimates suggests that without a vaccine for Corona Virus the airline industry will continue to drain cash. Which brings us to the next question, what about a bail-out from the Trudeau government? A bail-out can have different structures, recent bail-outs have only helped corporate bond holders and not common stock (share) holders. This would mean in case the company is about to go bankrupt and a government bail-out comes, it still won't help us common stock holders.
Bottom Line:
Using a combination of Fundamental and Technical Analysis we at A&T are shorting it in the medium term with short positions activated at $21.0 and will be open to $13.0. Short positions will be protected with stop limits at jumping back inside the triangle @ $19.95.
Fundamental investors will see the problem and will stay away from the stock in the mean-time. While, retail investors with buying the dip mentality will continue to pour money in without understanding the underlying risks associated with this stock at the moment.
$AC Air Canada Bullish Reversal Pattern $27 target
Rising 3 valley pattern developing
above $22 more bullish taking out previous peak
Indicators bullish with room to run
daily 50MA at just under $24 keep in mind
