User Comment: Hey Victor! What do you think about taking a bite of United? Too big to fail?
Victor: It’s a fair question and might be an interesting trade, ie bet on the stock price rebounding, but every time I’ve looked at Airlines as an investment, meanjng a company with solid fundamentals, financials and growth, all I see is a heavily debt laden company with limited growth potential, incredibly high capital requirements, onerous unions, highly compensated management teams and…and… similar to 2007 when you could have bought into some of the banks in the single digits and sold them a few years later for 3 to 4X returns, it is possible that the airlines “stock” price could rebound somewhat in the future, but right now the waters are so murky with the coronavirus that it’s anyone’s guess when they will be able to ramp back up and I feel like it will be long and painful process. But your point is well taken that the government will likely not let them fail, they may be overly beaten down, and they might be given unlimited money/loans to survive. For me though, not a company I personally would want to be invested in long term…but there is perhaps never a better time to buy an airline as they have certainly been beaten down. I prefer great fundamentals, no debt, lots of cash, and really high growth in cutting edge companies… one of those Im reviewing now is Blue Prism, an RPA company (Robotic Process Automation) with a subscription model similar to our companies and growth in the 70-100% range. I have not yet concluded my analysis, but what I’ve seen so far looks really good. Unfortunately, they are a very thinly traded company on the US exchange he as they are a British company and trade on the LSE (London Stock Exchange). But more than that later.
