The Qantas Airways Ltd (ASX: QAN) share price has been alternately battered and buoyed by fast-moving developments in the COVID pandemic.
Like every travel stock, the airline's shares were smashed in the early months of the outbreak. And like most travel stocks, the Qantas share price has also enjoyed some big moves higher amid the early vaccine rollouts and the more recent domestic and international border re-openings.
As travel numbers quickly rebounded, the airline – like airlines and airports the world over – has struggled with staffing issues. This has led to a spike in flight delays along with misplaced baggage. Which in turn led to Qantas receiving a rather unenviable Shonky Award from consumer advocacy group Choice earlier this month.
But that doesn't mean the Qantas share price couldn't fly significantly higher from here.
Image source: Getty Images
Undervalued and in an earnings upgrade cycle
We recently spoke to Andrew Martin, principal of Alphinity Investment Management.
When running his slide rule over any potential S&P/ASX 200 Index (ASX: XJO) shares, Martin stresses the importance of earnings and investing in quality, undervalued companies in an earnings upgrade cycle.
As far as which ASX 200 shares fit that bill today, Martin said, "Qantas Airways is one of those. We've seen some really good earnings upgrades come through."
Acknowledging that the airline has had some teething issues getting back up to speed, he sees good growth potential for the Qantas share price.
According to Martin:
People have been grumbling about them, lost bags and delays and what have you. But the reality is that pricing is going up, there's very strong demand domestically and offshore. And there's just not a lot of capacity around.
So they are able to generate very good profits, and very good cash flow which rapidly improves the quality of the balance sheet.
Qantas share price snapshot
The Qantas share price has outperformed the ASX 200 in 2022, gaining 14% compared to a 6% loss posted by the benchmark index.
