As usual we, the people, like to invest in companies we understand. There was a time when only the rich where flying. Now we must fly too. Thanks to low cost airlines, flying is now the cheapest way to travel long distance.
Let’s look into high growth low cost airlines. Major USA low cost carrier JetBlue Airways Corp has recently posted the first losses, so we can’t really consider it a high growth company. GOL Linhas Aéreas and Ryanair seem interesting growth stocks.
As usual, let’s go to Yahoo’s key data sheet for GOL and RYAAY we see that, surprisingly, the companies have comparable size: GOL has revenue of 1.16B and Ryan Air has revenue: 1.96B. Pretty shocking for our European friends to find out that local Brazilian GOL, serving 39 destinations in Brazil and 1 destination in Argentina , is not much smaller than Ryanair, the great phenomenon of European Airlines, which is kicking butts of glorious national European airlines, sending an old glories like Swiss Air belly up.
Well I feel that European skies, crowded with competition, have less room than empty South American skies. So one point for GOL which could expand in fast growing Brazil (part of the high growth BRIC world) and also into nearby South American countries.
Then we look at how expensive those stocks are. :
GOL: Trailing P/E: 28.68 Forward P/E (31-Dec-06) 18.16 Price/Sales: 5.51
RYAAY: Trailing P/E: 21.33 Forward P/E ( 31-Mar-07) 19.87 Price/Sales: 4.06
(the lowest the numbers above, the cheapest the company is)
GOL seems a bit more expensive than RYAAY right now, but a bit cheaper if it meets forecasts.
Ryanair has a much small risk connected to the country. Europe has much more stability than Brazil for sure. But what will make me buy GOL on first March (did I ever tell you I buy 1000 $ worth of stock every Month?) is the dividend yield of 0.40% (we, modern lazy proletarians, like the idea of money flowing to us without work). RYAAY does not give any dividend (what a shame!).
Also the debt situation of GOL is lovely: hardly any debt!
Regarding the debt situation of Ryan Air, there is something quite strange which I don’t like. They seem to have a total debt of 1.82B and at the same time cash for 1.87B. So you may say that it is very nice to have more cash than debt…. but the suspicious proletarian typing is wondering… Why do they pay interest on that debt if they really have all that cash in their pocket? It does not make much sense to me, eve though they would probably explain to that debt is connected to airplanes leasing or similar stuff… Still they could pay airplanes cash, get better deals and have less debt…
BUY, SELL, KEEP 
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