QUICK BUY ALERT: GOL TRANSPORTES (GOL)

Earlier this week, we mentioned that we're looking to make an addition to our portfolio. Since then, we've done more research and found something we like in a sector we're not yet invested in. The company we'll be purchasing stock in today is Gol Transportes Aéreos (GOL), a Brazilian airline that we believe has the potential to outpace competitors in the market. It's no secret that airline performance has been down since COVID-19, and this stock is no different. We also know, however, that airlines have been on the mend for months and months now. The thing that makes Gol different, however, is its stock performance relative to its business performance. Despite daily flights through Gol rising to 75% of their pre-pandemic levels, the stock hasn't reflected this correction. This is partly due to their still-reduced free cash flow, which sits at around 35% of its pre-pandemic levels. As the business climbs back to its total capacity, these stats will climb even higher, perhaps exceeding their pre-COVID numbers in time. Hotel and resort stocks such as Sabre Corp. (SABR) and Viad Corp. (VVI) are already trending higher than their 2019 levels, and it's only a matter of time before airlines catch up.

(Gol (GOL) performance from January 2019 - August 2022 — each candle is one month.)

This information gets even more pertinent when you compare Gol's performance to its global counterparts. The U.S. Global Jets ETF (JETS) is an ETF that encompasses many international airlines. By no means does its performance surprise—it's down since the pandemic, and by a wide margin. Despite this, it's still not nearly as down as Gol, yet this isn't the fault of Gol. There's nothing they've done wrong, per se; it's merely a product of an overreaction and a statistical outlier. Just as Gol sharply fell, we believe it'll see an equally steep rise in price in the future to catch up with the global average performance for airlines.

We've purchased Gol at $4.69. We believe vacation and airline securities will fall in line with one another as the world continues to open up and airlines return to full functionality. This may not be one we'll hold forever, but it's certainly one we see opportunity in. As always, happy investing.