Copa Holdings: At All Time High and Still Has Room To Run

| About: Copa Holdings, (CPA)

Panamanian airliner Copa Holdings (NYSE:CPA) broke out of a base yesterday to a new all time high with near record volume.

From Google Finance:

Copa Holdings, S.A. (Copa Holdings) is a provider of international airline passenger and cargo service. It offers approximately 92 daily scheduled flights among 30 destinations in 20 countries in North, Central and South America and the Caribbean from its Panama City hub. The Company provides passengers with access to flights to more than 120 other destinations through code share arrangements with Continental Airlines, Inc. (Continental), pursuant to which each airline places its name and flight designation code on the other's flights. On April 22, 2005 the Company acquired AeroRepublica S.A. (AeroRepublica), a Colombian air carrier providing point-to-point service among 12 cities in Colombia and to Panama City. AeroRepublica operated a fleet of seven leased MD-80s and two owned DC-9s. As of December 31, 2005, Copa Holdings fleet consists of 22 Boeing 737-Next Generation aircraft, two Embraer 190 aircraft, 11 MD-80 aircraft and two DC-9 aircraft.

FUNDAMENTALS: After losing money in 2000, Copa Holdings has since reeled off six straight years of very impressive earnings growth - 37% in '01, followed by growth in the following years of 135%, 41%, 21% and 60% last year. In '07, the company is expected to increase earnings by another 34%, so the future continues to look bright. Net margins are very good and well ahead of the industry average at around 16%, while return on equity [ROE] is an outstanding 43% and rising, If there is a negative, it's the amount of debt the company carries, which is considerably higher than other airliners (however, it has been decreasing over the years).

TECHNICAL: CPA broke out of a cup with handle base today with near record volume to a new all time high. That's the good news. The bad news is that sell volume in the left side of the base is very heavy. Given the incredible run the stock had last year when it tripled in price, it's not too surprising to see that kind of sell volume in the left side, but it does lend a little doubt to the success of this breakout. What I did is leave the breakout alone and am looking for a light volume pull back to the 64 - 65 range, essentially make the stock prove to me it can hold this breakout before initiating a position. Despite last year's run, I believe there is still some room to run in this stock given the fact this is just a second stage base. It won't triple again, but don't be surprised to see it move another 20 - 40% over the next year.

CPA 1-yr chart: