Hi Charles,
Good timing on the question, 30-minutes before the midday cut-off (AEST).
We looked at Qantas briefly in March following its disappointing 1H update Here – at the time we were “neutral at best” around $9.40 with oil prices a concern at the time.
Today the stock is trading more than 5% lower, and the US-Ian war appears to be approaching it conclusion – we hope! We feel the markets pricing in a sustained period of elevated oil prices, however in our opinion investors should look through the current geopolitical volatility. Remember Trumps previous catch cry “Drill Baby Drill” he will do everything in his power to get US fuel costs down for the November midterms.
Qantas is currently trading on the cheap side of the ledger, and if fuel prices normalise as supply concerns ease, the stock looks well placed for a reasonable re-rate as operating conditions improve.
- We like the risk/reward towards Qantas below $9, although they have the large capex bill ahead of them as they refresh the fleet. We don’t view QAN as a buy and hold sort of stock – more a trading vehicle in the short term, hence, it’s unlikely to find it’s way into our portfolios, but may feature in our trade ideas section.
