Panamanian airline stock Copa Holdings is building a strong base and approaching a buy point as airfares rise and holiday travel picks up. This market leader is today's pick for IBD 50 Stocks To Watch.
Copa is forming a long, deep cup-with-handle base with a buy point of 89.27. CPA shares rose 2% Tuesday, well ahead of its 50-day moving average. It's Relative Strength Rating lifted to 91 in the strong action while the 95 Composite Rating show remarkable strength.
It announced last week that passenger traffic (revenue passenger miles) shot up 6.4% over the year-ago period. The air carrier serves 69 destinations across the Americas and is prospering as the post-pandemic travel craze helps to fuel demand up and down the Americas.
The Thanksgiving weekend was especially strong for U.S. airlines, with Sunday Nov. 27 marking the busiest day for U.S. airports since 2019, according to Transportation Security Administration data.
U.S. passenger volumes have risen 6% year-over-year but are still roughly 5% below pre-pandemic levels. U.S. airline prices rose 36% in November from a year ago, according to the U.S. Bureau of Labor Statistics' latest consumer price index.
Copa Outperforming Other Airline Stocks
Raymond James analyst Savanthi Syth issued a report this week, noting she expects demand to contract for most airlines in the first half of 2023, due to fuel prices and hiring challenges. But she pointed to Copa's cost-cutting measures since the pandemic, saying it had created "a formidable defensive moat."
Recent upgrades include Cowen, which raised its rating to outperform from market perform, with a new 98 price target.
Copa is ranked No. 1 in IBD's Transportation-Airline industry group, which holds a lowly 119 spot out of 197 groups. It leads fellow components Ryanair, Frontier, Delta and Southwest.
Finally, the carrier can look forward to the strong Latin American GDP growth in 2023.
Chile is the only country in the Western Hemisphere currently forecast to have negative growth in 2023, according to the International Monetary Fund. Several may grow more than 3%, including Venezuela, Bolivia and Copa's home country of Panama.
The U.S. is forecast to grow just 1%.
Follow Michael Molinski on Twitter @IMmolinski
