Copa Buffeted By Macro Issues

Operationally, Copa Holdings (NYSE:CPA) continues to do well with those things it can control. The company’s planes are pretty full, non-fuel costs are well-controlled, and its hub-and-spoke system is well-placed to continue benefiting from traffic growth across Central and South America. Unfortunately, there are other parts of the operational picture that Copa cannot control, and those didn’t go so well for the company in the second quarter, leading the shares down to a new 52-week low.

There are always going to be macro worries with a company and stock like Copa. The company needs healthy economies in major operating areas like North America, the Caribbean, and South America, relatively stable currencies, and manageable fuel costs, not to mention reasonable and responsible competitors. While the market is clearly sour on Copa right now, and there are ongoing economic and currency risks in countries like Brazil and Argentina, I think the long-term value opportunity is pretty compelling if you can tolerate the near-term risk, volatility, and unpopularity.

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Copa Buffeted By Macro Issues