2 Aviation Stocks Beyond Air Canada: Buy & Hold Alert!

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Summary

  • Most airlines companies around the world continue to bear the brunt of the COVID-19 pandemic.
  • With the vaccination campaign picking up pace, however, some airlines are hopeful for a change of scene in terms of passenger strength by the summer of 2021.
  • Freight carriers, meanwhile, continue to be far less impacted by the lockdown restrictions that have beaten passenger flights.

Most airlines companies around the world continue to bear the brunt of the COVID-19 pandemic, including Air Canada (TSX:AC). But with the vaccination campaign picking up pace, Canada’s top carrier is hopeful for a change of scene in terms of passenger strength by the summer of 2021. Air Canada, however, is not the only one hoping for a better summer. ONEX Corporation’s WestJet Airlines (TSX:ONEX) is also making some changes to accommodate a surge in passenger demand by June.

Speaking of airlines, freight carriers like Cargojet Inc (TSX:CJT) continue to be far less impacted by the lockdown restrictions that have beaten passenger flights.

So, after a year of COVID-19, how are these two TSX-listed aviation stocks performing? Let’s take a look.

WestJet Airlines (TSX:ONEX)


Stocks of WestJet Airlines owner ONEX Corporation are currently trending high on the TSX among top price performers and financial services companies. The stock shot up by over 71 per cent in the past year and has increased by more than 10 per cent in the last one month.

In the hopes that summer travel may kick in the wake of ramped-up COVID-19 vaccinations in Canada, WestJet Airlines has decided to resume some of its suspended domestic routes in June.

©Kalkine Group 2021 

The Canadian carrier said on Wednesday, March 24, that it would restart flight services to five airports in Atlantic Canada and Quebec from June 24.

Andy Gibbons, the airline’s director for government relations, has also urged the government to ease its strict quarantine protocols for travelers by May 1.

WestJet, which happens to be Canada’s second largest carrier, is reportedly operating at about 10 per cent of it pre-pandemic traffic. Owner Onex Corporation reported in February-end that its total segment net earnings for year 2020 were C$ 860 million, while its asset and wealth management segment saw annual earnings of C$ 87 million.

Cargojet Inc (TSX:CJT)


While traffic for passenger airlines nosedived amid the pandemic-prompted travel bans, the global shift to online shopping pumped up business for freight carriers like Cargojet Inc. This increase in demand saw the top Canadian cargo carrier’s top line soar to C$ 668.5 million in year 2020, which was significantly higher than that of C$ 486.6 million in 2019.

©Kalkine Group 2021

While Cargojet stock is trading over 34 per cent below its record 52-week high of C$ 250 (9 November 2020), it still registers a growth of over 68 per cent for the past one year.

The airline stock currently holds a price-to-book (P/B) ratio of 16.18 and a debt-to-earnings (D/E) ratio of 3.27, with the company posting a market cap of C$ 2.83 billion, as per the TMX data.

Cargojet also boosted its quarterly dividend by 11.1 per cent quarter-over-quarter (QoQ) to C$ 0.26 earlier this month. The dividend yield currently stands at 0.635 per cent, as per TMX data.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.


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