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The airline and transportation sector has enjoyed the favor of investors this year. However, only major airlines like Delta (NYSE:DAL) and United Continental Airlines (NYSE:UAL) are continuously covered. I recently wrote an article on Alaska Airlines (NYSE:ALK) because regional airlines have outperformed major airlines. Like Alaska Airlines, there are several other regional airlines that deserve cover because they may provide more capital appreciation than airline titans. Copa Holdings SA (NYSE:CPA), a Panamanian airline, is a company that has not received attention from Seeking Alpha contributors lately. There is only one Seeking Alpha article covering Copa Holdings in March. However, it may provide capital appreciation to investors for the following reasons:

Copa has been able to be profitable while providing a good service and reduce the cost of operation and related expenses. The company's hub is Tocumen International Airport in Panama City. It currently offers more than 280 daily-scheduled flights to 64 destinations in 29 countries in North, Central and South America. The airline is also one of the twenty-eight members of "Star Alliance," the largest airline alliance in the world. The airline is also the owner and operator of AeroRepublica, a Colombian airline. The main hub acts as a bridge between North and South America flights, and thus Copa enjoys steady passenger traffic.

From the technical side, Copa is trading with a P/E of 16.07 and a forward P/E of 10.87, which offers good value. The company has about $60 million in cash. Further, it pays a near 2% dividend yield to shareholders. Although it carries a sizable debt, with a debt ratio of 0.78, its sales on a quarter-over-quarter basis increased by 17.74% in the last quarter, and it has a profit margin of 14.51%.

According to the company's most recent earnings report, it saw a net income for the full year increase to $326.5 million or earnings-per-share of $7.35 from $310.4 million or earnings-per-share of $6.98, a 5% increase. Further, the total revenues for 4Q 2012 increased 17.7% to $599.8 million. In addition, passenger traffic grew 23.7% for 4Q12 led by international traffic growth.

Furthermore, the company reaffirmed its preliminary guidance for 2013. Copa plans to increase its average load by 0.6% to 76%. In addition, it has hedged the price of jet fuel to $3.30 through hedge contracts. This should project in an increase of profit margin from 17.9% to 18-20%.

The take home message:

Copa Airlines's strategic hub in Panama city serves as a bridge between North and South America, and with the membership in "Star Alliance," the company should see steady passenger traffic. Although the company carries a substantial debt, the solid business model has increased sales in a quarter-over-quarter basis by around 18%. Moreover, the increase of 10% in international passenger traffic will only improve its revenues. It currently pays a near 2% dividend yield, and with its growing profit margin, dividend hikes are a possibility just around the corner. Thus, I would consider Copa Airlines a solid option on the long side of the markets.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.