WestJet stock will do “very, very well” if the price of oil falls: Brian Acker

Shares of WestJet Airlines (WestJet Stock Quote, Chart: TSX:WJA) hit a new 52-week low yesterday, provoking investors to wonder if and when the skies will clear for Canada’s second-largest carrier. According to Brian Acker, CEO and chief investment strategist at Acker Finley, the signals of a turnaround could start appearing any day now.

WestJet continues to battle headwinds as its share price dropped almost five per cent in trading on Tuesday, closing at $18.48, a low not seen since early 2016. The company has been hit by labour strife and higher fuel costs, both of which are impacting its bottom line. Last month, WestJet announced its first quarter 2018 financials, which included a 20 per cent decline in profits.

Meanwhile, the company is pressing on with major expansion plans, increasing its intercontinental travel and launching a new discount carrier. Last week, Swoop took the skies, flying out of a small handful of Canadian cities close to the US border and aiming to attract customers with ticket prices 30 to 40 per cent lower than the national carriers.

Acker points to the company’s earnings which have been “crashing,” saying that the low share price could nevertheless be a buying opportunity.

WestJet stock price history

“Since 2010, there’s been three times that the stock has been at this level and it has done fantastically after it hits this level,” Acker told BNN Bloomberg. “I would buy a little bit here, certainly on the 52-week low.”

WestJet does pay a quarterly dividend, which now sits at a 3.07 per cent yield. It’s Q1 2018 featured revenue of $1.19 billion, compared to the consensus $1.20 billion, while its EPS came in at $0.32, missing the consensus $0.35.

“It’s a good one to keep your eye on,” says Acker. “Certainly, if oil tops out here and starts to roll over, I think WestJet will do very, very well in the future.”