More in AAP & AAFLY for this week

Introduction

Honestly, we were having multiple orders in various stocks of interest. With the current drop, two got triggered for AAP & AFLYY. Both were our pick for the last two weeks. We noticed in both some resistant from the stock to drop. It was more ideal to wait more than a week for a 2nd portion on the same pick, but we will not regret those stocks for below reasons.

Air France KLM (AFLYY)

1. On 19th June 2023, the company declared a new buyback program of its shares to support shareholders and the company seeing the opportunity in such prices. The buyback will be for 18 months starting June 2023 and for maximum of 5% of total shares. The limit to the buy is 4 euro (equivalent of almost $4.35). This is a big positive sign in such prices and that the company see the fair price above double of current price of $1.81.
2. During the Covid issue, KLM was of need of huge loans. On March 2023, KLM announced fully repayment of 2.5 billion euros to France. KLM confirmed a bounce in revenues from Covid levels, expecting 2024 to be equivalent to pre-Covid when price of stock was around $11 (6 times of current prices). [Reference]
3. AFLYY, it is easy to know that 2020 till 2022 was tough to airlines. For that prices suffered of its shares. We need to be ahead of what will happen in future. In June 2023 and during Paris Air Show, India airlines are adding 100 planes per year to their capacity (470 planes in total) !
4. As shown below, AFLYY is really a golden opportunity for investment for next two years. We are paying at one of the lowest prices ever. It is easy to notice there is a peak wave during each 5 years and stock is due for another. Previous peaks where in 2007, 2010, 2014, 2018 which after we didn’t get the next one, too late.

Advance Auto Parts, Inc. (AAP)

1. Honestly, we see AFLYY more attractive than AAP. However, AAP still another attractive option. It is enough that their directors are buying the stock at current prices, the lowest price of 10 years during June 2023.
2. It is the most hammered stock out of its peers. Even if the company internally not doing well, the management is changing end of this year with new ideas for future.
3. AAP Bounced before from such levels and as economy situation improve, the stock will improve in price and it is fitting our packs’ conditions of buying a stock with potential of a double within 2-3 years. Below is a the graph for 10 years.