A Hidden Caribbean Gem

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Panama-based Copa Holdings (CPA) — through its subsidiaries Copa Airlines and AeroRepºblica — provides both passenger and cargo services in Latin America. Copa Airlines currently offers 110 daily scheduled flights to 35 destinations in 21 countries in North, Central and South America and the Caribbean. AeroRepºblica is the second-largest domestic carrier in Colombia.

Founded way back in 1947, Copa Holdings only truly came into its own in 2005. That was the year it completed the renewal of its fleet, acquired AeroRepºblica, and launched a successful initial public offering on the New York Stock Exchange.

Central to Copa Holding’s success has been its "Hub of the Americas" business model. Combine that approach with one of the youngest and most efficient fleets in the world and a relentless focus on reducing costs, and Copa Holding’s success has become the envy of rivals across Latin America.

Copa Holding’s financial results so far this year have been stellar. In Q2 of this year, it posted net income of $22.9 million, or 53 cents per share, versus $15.1 million, or 35 cents per share, in the year-earlier quarter. That 51% jump blew the doors off Wall Streets original EPS estimates of 44 cents per share. Revenue also climbed 39% to $191.5 million from $137.4 million a year ago.

Investors may be in for another upside surprise when the company announces its next set of results in a few weeks. The first indications look good. Copa Holdings’ system-wide passenger traffic (RPM) increased 26.8% in September, while capacity (ASM) increased 17.4%. System load factor for the month was 73.3%, an increase of 5.4 percentage points, compared to September 2005. The numbers for August were almost as impressive.

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In 2005, Skytrax awarded Copa Holdings the title of "Best Airline in Central America, Mexico and the Caribbean" and "Best In-flight Crews in the Region." Copa Airline’s operational performance also makes it one the best in the world, with an on-time arrival rate of 91.7% and a flight-completion factor of 99.6%.

So buy Copa Holdings (CPA) at market today, and place your stop at $29.50. A word of warning, though: the stock can be quite volatile. Swings of 3% (or more) per day are normal. There are no options on this one.


All eight of our Global Bull Market Alert stock positions are now in positive territory. Last week’s stock pick — America Movil (AMX) — is up almost 5% in just its first week, and the options are up more than 32%. To make room for Copa Holdings (CPA), take your 12%+ profits on Irish biotech play Icon plc (ICLR). That’s an annualized gain of more than 72%. Move your stop on Brazilian airline manufacturer Embraer (ERJ) to $36.50.

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