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Strategies & Market Trends : Value Investing

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From: Harshu Vyas	11/17/2023 2:28:30 PM
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Another stock worth considering is ALGT - the main issue (as I see it) is the lack of free cash flow but they do generate cash flow. They just spend it all on growth capex which could be an issue if the economy really slows down. They're going to open their Sunseeker resort in December (this year) which will probably help profitability in the summer months and reduce commodity risk. What I've noticed is airline stocks got hit as oil prices rose sharply in recent months but as oil prices have cooled, those same stocks haven't recovered. Why? Is travel demand slowing more than expected? Either way, ALGT trades at classic value metrics - 7x earnings, 0.5x sales and roughly book value. Oh, and did I mention the cash situation? Roughly $935m in cash ($950+m if you include restricted cash - also, another $64m in l-t investments). The market cap is $1.25b. It's a similar situation to SKYW earlier this year. ( SkyWest Inc (contrarianstocks.com)) Though, it's not the same and I'm careful to make that distinction. Debt's an issue - as it is with all companies in the industry. It stands at a little over $2b. I think it's manageable provided oil prices stay relatively tame.

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