A Bargain Stock That Looks Ready to Rip

Air Canada (TSX:AC) stock looks deeply discounted and ready to make up for lost time.

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The broader stock markets reacted mildly negatively in the last hour or so of Wednesday’s trading session when the U.S. Federal Reserve chairman Jerome Powell took to the stage. Indeed, rate cuts in the United States may very well be limited to one this year, shooting down the high hopes of some who thought that the Fed would cut three times before 2024 ends.

Though the market reacted mildly negatively, it still ended the session much higher, thanks in part to the great Apple and the aura of bullishness it sent across the broader artificial intelligence (AI) stock scene. I do think that investors are now okay with the reality that rates could stay higher for just a bit longer in the U.S.

The Fed sees just one rate cut for the year

Indeed, Canada has already gotten its first rate hike, so it’s understandable that U.S. investors showed a bit of short-lived frustration. In any case, markets held up far better than you’d expect, with the S&P 500 index falling just shy of 0.5% from its intraday peak and finishing the day up a solid 0.85%.

Perhaps this marks the last Fed meeting that acts as a slight drag for the stock markets. That is, unless they decide on no rate cuts (or maybe a surprise rate hike if inflation rears its hideous head one more time) later in the year. Either way, nobody knows with certainty what the future holds with the Fed.

That’s why I’d insist on evaluating individual companies and scooping them up if you view them as a bargain, regardless of how long the talking heads go on about rates, the Fed, and their predictions for just how many rate cuts we’ll see this year. Indeed, you can tune in and hear about the Fed for hours on any given financial television program, or you can look for bargains while they still exist today.

Arguably, fewer rates could take some steam out of the market rally and perhaps induce a bit of a pullback, providing value investors better opportunities as we head into summer. Indeed, the stock rally will eventually run into a correction.

Whether the stage is set for one, though, remains to be seen. Either way, the tug-of-war between the Fed and AI stocks is sure to be a good one going into July 2024. Will it be Fed fever or the AI surge that takes centre stage? We’ll have to wait and see.

If you’re thinking about rotating into value plays ahead of time, here’s one top TSX stock to consider right here.

Air Canada

Air Canada (TSX:AC) is one of those deep-value bargains that will not be for everyone. It seems to be stuck on the tarmac ever since the 2020 stock market crash brought shares from north of $50 per share to the low teens. Though shares have tried to lift off, here we are over four years later and AC stock goes for just $17 and change.

Indeed, other airline stocks, especially those in the U.S., have been better bets. Though the pandemic seems to have gone endemic, investors seem less keen to hop aboard the international airline just yet. Indeed, summer travel surges have helped AC stock take off in the Spring of 2023. This year, we’ve yet to see investors pile in quite yet.

Undoubtedly, it’s been mostly turbulence and a lack of flight for passengers aboard the stock. Things could change as value hunters pursue deeply discounted names, perhaps in the face of a tech correction and value rotation. The stock goes for 0.29 times price-to-sales ratio, which is absurdly cheap.

Created with Highcharts 11.4.3Air Canada PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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