Investment Thesis
Air Canada (ACDVF) [TSX:AC] is Canada’s largest domestic and international airline. We have a positive outlook on Air Canada based on: (1) expected margin expansion due to falling oil prices and addition of new airplanes, (2) free cash flow growth thanks to falling capital expenditure, and (3) significant reduction in its leverage. Its shares are currently trading at an attractive valuation and we believe there is significant upside from the current level. In fact, we calculated its shares could surge by 66% in the next 12 months. We believe the airline