Is Qantas a buy at the current price?
Among the more obvious victims of the COVID-19 pandemic have been the world’s airlines. In Australia, Virgin Airlines in April became one of the first large businesses to enter administration, and Qantas (ASX:QAN) has scaled back its operations to a tiny fraction of normal capacity and loses money every week while this continues.
More recently, Warren Buffet’s Berkshire Hathaway announced that it had exited positions previously taken in the big four US airlines, stating “the world has changed for airlines” as a result of the coronavirus.
Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.
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Oscar Duggan
:
Hi Tim. I have had a look at QANTAS’s performance over the past 5 years and have observed a steady decline in net debt and a continuous steady growth in revenue. With the recent announcement of QANTAS cutting back staff and that they expect to be loosing millions a week is it safe to assume that it would be a good investment at 3.20 or am I better off waiting in the next few months for a suspected crash. What price is a good buy in your opinion?
Tim Kelley
:
Hi Oscar. I think it is very hard to forecast what the market might do in the short term – the sharp rally from late March is a good example of the market’s ability to surprise experienced investors.
Today, QAN looks like reasonably good value to me, but that doesn’t mean it won’t get cheaper in the coming months.
jason
:
I will be interested in Qantas at a price that begins with a 1… And I don’t mean $10.
There are far better risk/return propositions in the market than this.
Tim Kelley
:
Hi Jason. What has caught your eye in terms of attractive opportunities at the moment?
Jim Hasn
:
Excellent article. I suppose the real question is whether there are other companies to invest in that also have a better risk/reward profile.
Tim Kelley
:
Thanks, Jim. And yes, that is a good question to ask.