I think we are onto something with these Mexican stocks. An in particular airport related names.
Here is another good idea)
Copa Holdings, S.A. (CPA)
One of Latin America’s major carriers, Copa Holdings. Copa is a parent company, operating through two subsidiary airlines: Copa Airlines, the larger carrier, is based in Panama and serves destinations in the Caribbean, northern South America, and into North America, while Copa Colombia is a domestic carrier in its namesake country, with routes into cities in northern South America and to the Copa Airlines hub in Panama. A third subsidiary, Wingo, is a low-cost regional carrier. The holding company is based in Colombia.
In the last reported quarter, 3Q22, Copa had a top line of $809.4 million. Acknowledging that COVID restrictions had badly distorted the data for 2020 and 2021, the company provided comparative information for 2019, the last pre-pandemic year. The 3Q22 revenues were up 14.3% compared to 3Q19. Quarterly net income, at $115.9 million, was also up, by 11.4% compared to the pre-pandemic 3Q19. Copa also reported a solid cash holding, of $1.1 billion. This total was equivalent to 42% of the total revenues from the previous 12 months.
Copa Holdings also releases monthly traffic statistics from across its airlines. Turning to the most recent stats, Copa showed gains in December, with available seat miles (a measure of total seating capacity) increasing 7.7% from 2019 levels, and revenue passenger miles (measuring paying passenger traffic) was up 6.1% from 2019.
In his coverage of this stock for JPMorgan, analyst Guilherme Mendes lays out a set of compelling reasons to buy into Copa now. He writes, “In our view Copa offers an interesting combination of: (i) Discounted valuation, currently trading at a 25% discount to its historical EV/EBITDA average; and (ii) a relatively comfortable balance sheet situation, with leverage expected to end 2023 at only 1.8x net debt to EBITDA, the lowest among LatAm carriers. Added to that, Copa’s immediate liquidity over short-term payables is the best among the cluster. Our 2023 EBITDA is 2% above consensus estimates.”
To this end, Mendes gives the shares an Overweight (i.e. Buy) rating, and a price target of $132, implying that a gain of ~44% lies ahead for the shares.
