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Is Qantas a buy at the current price?

12052020_Qantas

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.

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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.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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6 Comments

  1. 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?

    • 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.

  2. 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.

  3. Excellent article. I suppose the real question is whether there are other companies to invest in that also have a better risk/reward profile.

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