Air Canada (TSX:AC) is a Montreal-based company that provides domestic, U.S. transborder, and international airline services. Canada’s top airliner passed through an extremely challenging period as the COVID-19 pandemic battered the sector. Today, I want to go over three reasons I’m looking to snatch up this top growth stock in the final week of June. Let’s dive in.
Air Canada’s rebound is well underway
Back in May 2020, Air Canada President and CEO Calin Rovinescu predicted that it would take three years before the company would get back to 2019 levels of revenue and capacity. Rovinescu also predicted that the airline industry would be smaller in the near term. The company faced major turbulence during the Great Recession as the airline industry was thrown into turmoil. Fortunately, Air Canada greatly bolstered its balance sheet over the course of the 2010s. That put the company in a strong position to weather the storm of the pandemic.
This company released its first quarter fiscal 2023 earnings on May 12. Air Canada reported first-quarter operating revenues of $4.9 billion – up $2.3 billion compared to the previous year. Revenue growth was powered by higher passenger revenues that stemmed from increased travel demand. Meanwhile, operated capacity increased 53% compared to the first quarter of 2022. That reached 84% of available seat miles (ASMs) in 2019.
Adjusted cost per available seat mile (CASM) climbed 6.9% year over year to 14.5 cents. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Air Canada reported adjusted EBITDA of $411 million in Q1 2023, which was an improvement from an adjusted EBITDA loss of $143 million in the first quarter of fiscal 2022.
This is still one of the top growth stocks on the TSX
Air Canada stock proved to be one of the most explosive options on the TSX over the course of the 2010s. At one point its shares had dipped below the $1 mark in the early part of the decade. By December 31, 2019, shares of Air Canada were trading near $50 a share.
Canadian investors should still be intrigued by the growth potential of this top TSX stock. Air Canada is well-positioned for strong earnings growth as the airline industry is in full recovery mode following the COVID-19 pandemic.
Investors should be attracted to Air Canada’s current value
Shares of Air Canada have climbed 7.7% month over month as of early afternoon trading on Tuesday, June 27. The stock is now up 23% so far in 2023. Investors who want to see more of its past performance can play with the interactive price chart below.
This top growth stock is trading in favourable value territory compared to its industry peers at the time of this writing. The relative strength index (RSI) is a technical indicator that measures the price momentum of a given security. Shares of Air Canada climbed into technically overbought territory in the middle of June. However, it has dropped back to neutral levels at the time of this writing.
