Airline Stocks: Should You Buy Air Canada?

Have airline stocks hit a bottom, making it the perfect time for investors to buy Air Canada (TSX:AC) on the Toronto Stock Exchange?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you are a Toronto Stock Exchange investor looking for a good bargain right now, airline stocks should fit your watch-list criteria. It is true that the COVID-19 pandemic has shattered the industry. Nevertheless, investing is a long-term game, and these stocks may very well bounce back in the next five years.

If you want to invest in airline stocks, it seems that they may have hit a bottom in market value. While they might fall further in the short term, there is a bullish case to buy and hold airline stocks at current valuations for five years. If you decide that you want to take this risk, practice patience with your decision.

Investing in the stock market can be scary, even for professionals and people with experience. That being said, developing a healthy mindset is crucial for surviving market volatility.

Is Air Canada a good stock to buy today?

Air Canada (TSX:AC) hit a 52-week low of $9.26 after the March 2020 stock market sell-off. Prior to the health emergency, investors traded the airline stock for $52.71 per share. At the time of writing, the market is pricing Air Canada stock at $16.04 per share.

Air Canada is not currently issuing any dividends. Thus, if you are an income investor, this stock might not be a good option for your retirement portfolio.

Calin Rovinescu, president and CEO of Air Canada, had this to say about the tragic loss in demand for airline travel during the COVID-19 pandemic:

“As with many other major airlines worldwide, Air Canada’s second quarter results confirm the devastating and unprecedented effects of the COVID-19 pandemic and government-imposed travel and border restrictions and quarantine requirements. Canada’s federal and inter-provincial restrictions have been among the most severe in the world, effectively shutting down most commercial aviation in our country, which, together with otherwise fragile demand, resulted in Air Canada carrying less than four per cent of the passengers carried during last year’s second quarter.”

Airline travel should pick up in the next year and continue that trend in the future. As demand rebounds, revenue growth will spark investor interest in this industry. In other words, this near-term setback shouldn’t be a permanent feature of the world in the next five to 10 years.

Be safe with your investment decisions

Many experts don’t consider airline stocks the best investment today given the uncertainty surrounding a COVID-19-induced global economic recession. Even as protective restrictions ease for travel and business activities, some people still fear travel. Moreover, the loss in income during this time could impact business and personal travel plans.

Every investment comes with risk. That’s why it is crucial to maintain a comfortable cash emergency fund and a diversified stock market portfolio. Never risk more than you are willing to lose!

Even more importantly, as you continue your investment journey, work on building a successful mindset toward investing. Greed could lead even the best investors toward becoming the greater fool in the world of finance. And fear causes investors to sell stocks at a loss when they shouldn’t or miss out on solid profit opportunities.

Don’t put yourself in either one of these categories. Develop a discerning and prudent approach to every decision you make in the stock market.

Should you invest $1,000 in Corus Entertainment right now?

Before you buy stock in Corus Entertainment, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Corus Entertainment wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Debra Ray has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canadian flag
Dividend Stocks

The 3 Best Canadian Dividend Stocks You Can’t Ignore

These stocks provide high dividend yields, steady cash flows, and help anchor portfolios against market fluctuations.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Stock Market Sell-Off? These 2 Dividend Knights Are Safe Bets Now

Whenever you're fearful about what the future of the stock market holds, just go back to basics with these two…

Read more »

dividends grow over time
Dividend Stocks

Income Investors: These Canadian Dividend All-Stars Are Raising Payouts Again

Long-term income investors can consider these Canadian dividend all-stars that are trading at good valuations.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Here’s How Many Shares of ZMI You Should Own to Get $500 in Monthly Dividends

This BMO monthly income ETF is diversified and easy to understand.

Read more »

dividends can compound over time
Dividend Stocks

Tariff Risks Are Rising: Here’s How to Stay Ahead as an Investor

Are you worried about tariffs? Worry no more and protect yourself with these three stocks offering protection.

Read more »

investor looks at volatility chart
Dividend Stocks

Market Correction: 3 Canadian Stocks to Buy Before Prices Rebound

These three Canadian stocks certainly offer a lot to investors, such as stability and value, but growth is definitely in…

Read more »

a person prepares to fight by taping their knuckles
Dividend Stocks

Tariff Trouble: How Canadian Investors Can Protect Their Portfolios

Canadian investors can protect themselves against Trump tariffs through diversification.

Read more »

Young Boy with Jet Pack Dreams of Flying
Dividend Stocks

Here’s How Many Shares of Peyto You Should Own to Get $100 in Monthly Dividends

Peyto Exploration and Development stock offers investors monthly income and exposure to the strong natural gas market.

Read more »