Better Buy: Air Canada Stock vs. Cineplex

In the debate between whether Air Canada (TSX:AC) or Cineplex (TSX:CGX) is the better buy, investors should consider these factors.

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With most stock prices falling during the ongoing bear cycle, it is the right time for investors to pile up on high-value stocks at bargain prices. In this regard, two of the most sought-after stocks are Air Canada (TSX:AC) and Cineplex (TSX:CGX).

Here’s my take on which one is the better buy right now.

Air Canada

Air Canada is the nation’s biggest airline services provide. The company deals in domestic, international and U.S. cross-border flights. As of March 15, 2023, Air Canada has announced non-stop flights between Montreal and Amsterdam for the entire summer. These moves, along with the resumption of other key routes, could continue to drive growth.

This flight will be made five times a week in luxurious Boeing 787 aircrafts. It will enhance connectivity between the air service provider’s two global hubs and complement Air Canada’s year-round service. 

Investors hope that this move will result in continued fundamental strength for the airline. Air Canada’s recent quarterly results appeared strong, with operating profits growing 71% to US$4.7 billion. Additionally, passenger revenue nearly doubled year over year, though the comps are relatively light, considering the impacts of the pandemic and Canada’s previous travel restrictions.

Of course, Air Canada stock looks cheap relative to its historical levels in recent years. If travel patterns continue and the consumer remains strong, this is a stock that could outperform. That said, AC stock is also prone to an uncertainty discount, which is clearly at play right now with this stock.


Cineplex is a Canadian multinational media and entertainment services provider. Apart from movies, the company also deals in location-based entertainment centers and caters to millions of people on a daily basis.

Cineplex’s move to diversify its business model is one long-term investors in this beaten-down growth stock may like. Indeed, the cinema business is one that appears to be in secular decline. The rise of prominent streaming platforms, and, of course, the pandemic, have shifted consumers’ spending patterns in the media sector. Thus, until something fundamentally changes, the company’s core business is likely to remain under pressure.

That said, Cineplex’s recent quarterly results released in February showed some light. The company brought in revenue growth of nearly 17% on a year-over-year basis. Net income also grew to $10 million, which is a massive increase considering the loss of $21.8 million in the same quarter the year prior.

Overall, these trends will need to accelerate from here in order for CGX stock to make sense at its current levels. Despite the optimistic outlook, this is a company with likely more headwinds than tailwinds right now.

Bottom line

Most investors may rightly assume that Air Canada would be my pick of the two companies. Air Canada’s positioning in its core market (it’s essentially a monopoly player in Canada) is notable. And while Cineplex shares similar market share characteristics, the secular decline of its core business can’t be overlooked.

Thus, for investors seeking a beaten-down value stock worth buying, my reluctant pick right now would be Air Canada.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Cineplex. The Motley Fool has a disclosure policy.

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