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Air Canada (TSX:AC) Stock: Can You Still Get Rich From It in 2020?

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Instead of resuming flight, the woes of Air Canada (TSX:AC) are mounting in the third quarter of 2020. Canada’s flag carrier’s problems are over the top following the net loss of $1.75 billion in the preceding quarter. In the first three months of 2020, the company reported $1.05 billion in net income.

Air Canada’s CEO Calin Rovinescu said about the first-quarter loss, “No adjectives can adequately describe the pandemic’s cataclysmic effects upon our industry, nor can numbers fully quantify the extent of financial devastation.” Investors hoping to get rich from the airline’s stocks rebound are at a loss for words with the widening losses.

Dark to darker

The dark period of Air Canada is getting darker as the months roll by. Mr. Rovinescu and the management team of Air Canada are begging the government to ease the coronavirus travel restrictions. He adds that Canada’s federal and inter-provincial restrictions have been among the most severe in the world.

Air Canada’s second-quarter results reflect the unprecedented and devastating impact of COVID-19 on the company and the aviation industry in general. Many global airlines are declaring bankruptcies, while others are receiving government bailouts.

Air Canada filed for bankruptcy court protection in 2003, and the nightmare is resurrecting in 2020. Rovinescu was in charge of the restructuring program for 17 years, where recovery took 18 months.  The stock went on to become among the recent decade’s best and top-performer in 2019.

The COVID-19 episode is entirely different from the 2003 experience. Air Canada’s capacity went down by 90% to 95% in the first two quarters. In the second quarter, revenue fell by 89% versus the same period in 2019, while passenger volume was 4% lower than the total volume.

Management expects the third quarter capacity to be not more than 20%. Although cash-on-hand on June 30, 2020 was over $9 billion, Air Canada estimates the daily net cash burn to be anywhere from $15 million to $17 million. There’s no clear runway given the operating environment.

Impossible chances

Air Canada is not imposing its will on the government to open the border to the U.S. The suggestion is to adopt less restrictive or evidence-based measures similar to those applied in Europe and other countries. Perhaps Canada can replace the quarantine requirements for countries with low COVID-19 risks from a public health perspective.

Can you still get rich if you pick up the airline stock today? No one has a crystal ball to foretell what’s in store for investors. The price fell 299% from $48.51 on December 31, 2019 to $12.15 on March 19, 2020. As of August 10, 2020, the share price is $16.23 or a 33.5% climb from its COVID-19 low.

Management is almost certain that returning to pre-corona levels will take at least three years. Only a miracle, like a successful clinical trial and eventual FDA approval of a vaccine, can stack the odds in favour of Air Canada. There are cheaper stocks whose businesses have brighter futures.

Speaking of potential to get rich from Air Canada in 2020…

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Fool contributor Christopher Liew has no position in any of the stocks mentioned.

The post Air Canada (TSX:AC) Stock: Can You Still Get Rich From It in 2020? appeared first on The Motley Fool Canada.



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Is BlackBerry Stock a Buy After Recent Quarterly Earnings?

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Investors flocked into BlackBerry (TSX:BB)(NYSE:BB) stock on Thursday after the Canada-based software and services firm reported better-than-expected earnings results. BlackBerry’s stock price surged as much as 10% in the morning, as the market celebrated BB’s good quarter.

A great quarter for BB?

Total revenue of US$259 million was 6.1% higher than last year’s and 26% better sequentially. The quarterly gross margin expanded to 77%, as the company reported its lowest quarterly cost of sales in 18 months. Analysts expected a margin reading of not more than 73%. The latest margin expansion should bring the company closer to its long-term target of 80-85% gross margin.

However, GAAP operating earnings were a loss of US$22 million due to a long-lived asset impairment charge and debenture fair-value adjustments. A GAAP loss per share of US$0.04 was far better than a US$0.10 loss reported last year and a US$1.14 net loss per share during a previous quarter, where goodwill impairments ravaged the income statement.

The company surprisingly grew its revenue, lowered its operating costs, and generated lower-than-expected losses.

What drove BlackBerry’s revenue growth last quarter?

Software and Services revenue, the core business, saw a slight 2% sequential recovery from a COVID-19-stricken quarter to US$151 million. However, this was still a 10% drop year over year.  The company should see further improvements, as car manufacturers boost production after plant shutdowns during the height of a pandemic earlier this year.

Amazingly though, Licensing and Other revenue surged 86% sequentially and 42% year over year to US$108 million. BlackBerry did well to unlock value by monetizing its intellectual property portfolio and licensing its software patents to second and third parties.

I’m not so sure if investors should rely on this volatile revenue line for the long term, as patents have finite lives. However, I would still argue that this revenue line should still be regarded as a core business — more so considering that the company identifies itself as a pure software technology play now.

Business wins during the quarter included the deal with StradVision to use the company’s trusted QNX technology in autonomous driving systems for South Korean automakers. New customers included the U.S. Airforce, the U.K. Ministry of Defence, the Royal Canadian Mint, Rolls Royce, and international banking group Lloyds Bank.

BlackBerry SecuSUITE for governments is now deployed in 17 national governments across the world. The company’s blue-chip customer base, which includes 18 of the G20 governments, nine of the 10 largest automakers, and nine out of 10 largest banks in the world, is growing to support BlackBerry’s targeted 90% recurring revenue profile.

Time to buy?

BlackBerry is one promising tech stock to buy that remains heavily subdued in the stock market. Its share price rises here and there in response to good news but finds its way back to value territory once the hype subsides. It’s a challenge to tell when the capital markets will finally appreciate the solid value in BB offerings and rewards the company’s efforts.

The company has earned trust in governments, defence, and high-security establishments. These are some of the hardest market verticals to penetrate for competitors. Its Internet of Things segment is attacking an organically growing US$38 billion total addressable market. Cybersecurity is a better sell now, as the world works from home.

Further, the revival of auto manufacturing plants across the world will aid revenue recovery in the short term.

BlackBerry gets better revenue per every single vehicle software install now. Updating and upgrading its QNX offerings to include more features on top of traditional infotainment, acoustics, instrument clusters, and telematics increased revenue points. Actually, QNX installs have up to 11 total functions now, including control systems, digital cockpits, AI-based security, and automatic driving active safety.

Investors may expect sustained growth in BB’s business going forward. However, there’s a stigma to the name after a failed mobile devices business that may require re-branding to remove biases in the market’s eyes.

Patience may be required.

Perhaps you may like this promising growth play better than BlackBerry stock…

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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and BlackBerry.

The post Is BlackBerry Stock a Buy After Recent Quarterly Earnings? appeared first on The Motley Fool Canada.



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Which Way Wednesday – Fed Edition

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And once again the Futures are up.  

As you can see from the S&P chart, we have had some massive gaps up in the thinly traded open and then drifted down during real trading at the end of the day.  This is like someone who works for the auction house shouting "100 Million Dollars" on the first bid for a painting to make sure the other suckers in the audience start bidding higher.

In the case of the markets, the Banksters buy up the Futures on thin trading (so it's very cheap to do) and cause the Retail Suckers to pour in and chase the momentum so the Banksters can dump their stocks all day long during real volume trading.  This is how rich people exit the market – they create a buying atmosphere and they take their profits while poor people follow their advice – which doesn't actually apply to their own actions.  You see the big brokerage houses doing that all the time, exiting positions while their analysts are pumping the Tesla stock.

We had a good day yesterday shorting the Dow (/YM) Futures from our trade idea in the Morning Report and congratulations to all who played along.  Our morning call for our Members was:

So we're sticking with our strategy of shorting the indexes (which didn't work yesterday) as we're likely to be rejected here (Dow (/YM) 28,100, S&P (/ES) 3,405, Nasdaq (/NQ) 11,475 and Russell (/RTY) 1,550) and, as usual, we can just short the laggards, which would be /ES crossing below 3,400 and /YM confirming below 28,000 – we should catch a quick ride down but the Fed goes tomorrow and that should give the marketsupport until they are disappointed by that so tight stops above!

As you can see, this wasn't rocket science, the pivot points on the Dow were 28,014 and 27,795 and we simply allowed for the pre-market BS pump job and took a stab at shorting early but once we confirmed the move below 28,000, it was a no-brained to jump in for the 200-point drop on the Dow (at $5 per point, per contract!).  This morning we're back to 28,000 again but we have a Fed Meeting at 2pm so it's not a good day to play the futures – too volatile.

Speaking of volatile, 

 

 

 

   

 

 

 

IN PROGRESS

 

 

 



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The IPOX® Week, September 21th, 2020

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  • Futures and Options expiration week delivers pain for most global equity investors, strong gains for investors in IPOX Strategies. IPOX SPAC Index (SPAC) extends big run-up.
  • IPOX 100 U.S. (ETF: FPX) adds +1.73% to +15.32% YTD. IPOX International (ETF: FPXI) rises +1.98% to +43.52% YTD. IPOX Europe (ETF: FPXE) adds +2.00% to +16.07% YTD.
  • More U.S. deals lined up as IPO window open in Europe

Track the performance of U.S. SPACs live with the IPOX® SPAC Index (BBG: SPAC, Reuters: .SPAC): The liquid IPOX SPAC (SPAC) added +3.81% last week, to +19.31% since its 07/30 live launch, outperforming the S&P 500 (SPX) and Russell 2000 (RTY) anew. SPAC news include: 1) fleet electrification solution provider XL Fleet to merge with Pivotal Investment Corp II; 2) 9 SPACs launched last week and at least 12 new SPACs filings include Apollo sponsored Apollo Strategic Growth Capital; 3) Playboy Enterprises explores “going public” via SPAC merger.

Expiration week delivers pain for most global equity investors, strong gains for investors in IPOX. U.S. Futures and Options expiration left investors in the IPOX Strategies (ETFs: FPX, FPXI, FPXE) towards

the top of the weekly performance rankings, as U.S. equity risk declined (VIX: -3.87%), rates steadied, and large-cap U.S. technology stocks drifted anew (NDX: -1.36%). In the U.S., e.g., the broad-based IPOX 100 U.S. (ETF: FPX), benchmark for U.S. IPO and Spin-off performance, added +1.73% to +15.32% YTD, extending the YTD/YY lead vs. the S&P 500 (SPX) to +1257 (857) bps. Strength extended to markets abroad, with the IPOX International (ETF: FPXI) and IPOX Europe (ETF: FPXE) all rising. Strength in IPOX-tracked specialty exposure often untracked in the conventional portfolios drove the good showing, including Michael Jordan-backed SPAC IPOX 100 U.S. member (ETF: FPX) online entertainment services provider DraftKings (DKNG US: +33.60%), online collaborations platform operator Zoom Video (ZM US: +14.55%), Dutch Payment processor Adyen (ADYEN NA: +10.76%) and key Saudi Arabia’s health care services provider Dr. Sulaiman Al-Habib (SULAIMAN AB: +6.86%). Corporate Actions and seasonality pressured select names including security services firm ADT (ADT US: -20.07%) and outdoor products/services providers vehicle maker Camping World (CWH US: -12.72%) and cooler maker Yeti (YETI US: -8.68%).

Select IPOX® Indexes Price Returns (%) Last Week 2019 2020 YTD
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) 1.87 27.93 37.88
IPOX® International (IPXI)* (USD) (ETF: FPXI) 1.98 31.37 43.52
IPOX® Indexes: United States
IPOX® 100 U.S. (IPXO)* (USD) (ETF: FPX) 1.73 29.60 15.32
IPOX® ESG (IPXT) (USD) 3.05
IPOX® SPAC (SPAC) (USD) 3.81
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) 2.11 34.55 21.70
IPOX® Nordic (IPND) 2.54 38.52 36.02
IPOX® 100 Europe (IPOE)* (USD) 2.00 30.97 16.07
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 3.34 4.41 32.49
IPOX® China (CNI) (USD) 2.25 26.31 51.61
IPOX® Japan (IPJP)** (JPY) 3.05 37.91 12.82

* Basis for ETFs: FPX US, FPX LN, FPXE US, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures (IPOM0). Source: Bloomberg L.P. & Refinitiv/Thomson Reuters. For IPOX Alternative Strategies Returns, please contact info@ipox.com

IPOX-linked ETFs (FPX, FPXI, FPXE) Movers (Last Week in %):
DRAFTKINGS 33.60 NETWORK INTERN’TL -32.69
STILLFRONT GROUP 19.53 GOOSEHEAD INSUR. -20.50
TESLA 18.63 ADT INC -20.07
MYOKARDIA 18.23 CAMPING WORLD -12.72
ADC THERAPEUTICS 17.63 INARI MEDICAL -11.01
ZEALAND PHARMA 15.43 YETI HOLDINGS -8.68
ADAPTIVE BIOTECH 15.21 SOFTWAREONE -8.07
SHOP APOTHEKE EUROPE 15.05 PINDUODUO -5.82
ZOOM VIDEO 14.55 FARFETCH -5.75
ARGENX SE 13.89 REYNOLDS CONSUMER -5.47

IPO Deal-flow Review and Outlook: At least 26 firms IPO’d across the eligible global markets last week, with the average (median) equally-weighted deal adding +57.67% (+11.81%) based on the difference between the final offer price and respective Friday’s close. U.S. cloud data warehouse Snowflake (SNOW US: +100.00%), DevOps software developer JFrog (FROG US: +47.23%), game software company Unity (U US: +31.44%) and portable dialysis firm Outset Medical (OM: +122.26%) all surged on debut. Abroad, Canadian payment firm Nuvei (NVEI CN: +77.50%) and British e-commerce unicorn The Hut Group (THG LN: +18.40%) also recorded strong gains, while Kuwait stock exchange operator Boursa Kuwait (BOURSA KK: +939.00%) rose more than tenfold. While high-profile data analytics unicorn Palantir (PLTR US) pushed its Direct Listing to month-end, select key deals lined up include Silver Lake-backed telemedicine firm GoodRx (GDRX US), PE-backed motorhome maker Knaus Tabbert (KTA GR) and German defense supplier Hensoldt (5UH GR). Other IPO news include: 1) Macquarie prepares IPO for its data analytic company Nuix; 2) mortgage lender LoanDepot to revive IPO plan; 3) TikTok weighs U.S. IPO upon U.S. ban whereas its rival Kuaishou mulls $5B Hong Kong IPO; 4) more homecoming secondary offerings from U.S.-listed Chinese companies include Zai Lab, ZTO Express, Baozun, and Huazhu.

Track global deal flow live on: https://bit.ly/32zolmG

The post The IPOX® Week, September 21th, 2020 appeared first on Low Cost Stock & Options Trading | Advanced Online Stock Trading | Lightspeed |.



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