Sunday, July 24, 2016

Seeking Alpha: Copa's Stock Recovery Has Outpaced The Business Recovery

It's pretty much a given that the Street will take stocks far too low in bad times and far too high in good times, so I can't say I'm surprised Copa Holdings' (NYSE:CPA) shares are up more than a third since my write-up in late December, when I thought the shares looked undervalued but still vulnerable to ongoing weakness in major South American economies.

It looks as though 2016 will be the bottom for Copa, but it is hard to feel a lot of confidence that the economies of Brazil, Colombia, and Venezuela are going to stage a strong, fast turnaround. That said, the company has been increasing its exposure to healthier economies like the U.S., while doing a good job of responsibly managing capacity and expenses. I still believe Copa can generate over $4 billion in annual revenue in 2024 and good cash flow, but my fair value hasn't moved nearly as much as the share price, so I don't see the same opportunity that I did in December.

Read more here:
Copa's Stock Recovery Has Outpaced The Business Recovery

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