Tuesday, March 11, 2014

Seeking Alpha: Ugliness In Venezuela Creating An Opportunity With Copa Holdings

There are exceptions to every rule, including the generally sound advice to steer well clear of airline stocks. Alaska Air Group (ALK) has done well for investors by focusing on the disciplined operation of regional routes, and Copa Holdings (CPA) has followed a broadly similar strategy in across North, Central, and South America.

Investors expect certain risks with airline stocks, namely volatile fuel prices and revenue uncertainty stemming from often irrational competition and the macroeconomic client. The ongoing mismanagement of Venezuela has created another significant risk for Copa, as devaluation imperils the company's significant cash holdings in the country and an escalating spat with the government of Panama could threaten even more.

No airline is a safe investment, but Copa looks well positioned to take advantage of growing traffic across Latin America for many years to come. The market appears to be all but writing off Copa's Venezuela operations, and the shares look too cheap today.

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Ugliness In Venezuela Creating An Opportunity With Copa Holdings

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