This is ridiculous -- bought more GOL
OK, now I understand that the Brazilian Bovespa is very volatile ... and I know that Gol Linhas Aereas Inteligentes (GOL -- free RT quote) has been on a tear over the past year ... but please, this is ridiculous -- traffic is climbing, guidance goes up, and the stock goes down?
GOL today released revised guidance for next year, guidance which has them earning between $1.71 and $1.89 a share at the current exchange rate. That means if they hit the top end of the range they're trading at a forward PE of about 14. And so far, their guidance has proven to be quite conservative for the most part -- and they have recently been blowing through analyst estimates with ease.
A forward PE of 14 for a company growing at this pace? That, I like. I know it's a bit high for an airline, and a bit high for a Brazilian stock ... but GOL is a special case in it's growth potential, cost containment, and margins.
And yet, the stock goes down today, whch is why I was finally inspired to buy a little more. I didn't jump on it quickly enough when they had a nice downgrade a few days ago and the price bumped lower temporarily, and perhaps because I'm kicking myself for missing that I've bought more today on this smaller dip.
I have written way too much about GOL lately (notes here, here and here, for a taste), but I find myself captivated by the story ... so perhaps I'm being too emotional about this one and buying my second position too early, but I don't think so.
To reiterate:
Most profitable (on operating margins) airline in the world (at least that I know of).
Serving a growing and increasingly mobile population in the largest country in South America.
Gradually expanding at low cost into other markets with short international flights.
Franchising their model to Mexico in a partnership agreement at relatively low cost.
Huge insider ownership by founding family that has a strong focus on operating performance and growth and a strong understanding of the Brazilian customer.
Resides in a country with strong price controls on oil and is not nearly as subject to fuel price spikes as US or large international airlines.
And great disclosure of operating performance and finances.
So I bought more today -- picked up another small bite of GOL at $27.50. Hope I wasn't too hasty, but I think I'll be happy with this holding for many years.
GOL today released revised guidance for next year, guidance which has them earning between $1.71 and $1.89 a share at the current exchange rate. That means if they hit the top end of the range they're trading at a forward PE of about 14. And so far, their guidance has proven to be quite conservative for the most part -- and they have recently been blowing through analyst estimates with ease.
A forward PE of 14 for a company growing at this pace? That, I like. I know it's a bit high for an airline, and a bit high for a Brazilian stock ... but GOL is a special case in it's growth potential, cost containment, and margins.
And yet, the stock goes down today, whch is why I was finally inspired to buy a little more. I didn't jump on it quickly enough when they had a nice downgrade a few days ago and the price bumped lower temporarily, and perhaps because I'm kicking myself for missing that I've bought more today on this smaller dip.
I have written way too much about GOL lately (notes here, here and here, for a taste), but I find myself captivated by the story ... so perhaps I'm being too emotional about this one and buying my second position too early, but I don't think so.
To reiterate:
Most profitable (on operating margins) airline in the world (at least that I know of).
Serving a growing and increasingly mobile population in the largest country in South America.
Gradually expanding at low cost into other markets with short international flights.
Franchising their model to Mexico in a partnership agreement at relatively low cost.
Huge insider ownership by founding family that has a strong focus on operating performance and growth and a strong understanding of the Brazilian customer.
Resides in a country with strong price controls on oil and is not nearly as subject to fuel price spikes as US or large international airlines.
And great disclosure of operating performance and finances.
So I bought more today -- picked up another small bite of GOL at $27.50. Hope I wasn't too hasty, but I think I'll be happy with this holding for many years.
This article posted by One Guy @ 1/05/2006 10:08:00 AM 0 comments
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