Qantas Airways Ltd (ASX: QAN) shares have smashed the benchmark over the past year.
The S&P/ASX 200 Index (ASX: XJO) airline stock has gained more than 19% in 12 months, compared to just over a 1% gain posted by the ASX 200.
And that's despite an 8% slide in the Qantas share price since 1 June.
In early trade on Friday, shares have recouped their opening losses and are trading back at $6.24 apiece.
So, is it too late to invest in the flying kangaroo's stock?
Why the ASX 200 airline could still be a bargain buy
Even after the outsized gains of the past year, Qantas shares could still be a "bargain" buy.
That's according to Mark Landau, founder of L1 Capital.
According to Landau (courtesy of The Australian Financial Review):
Shares are up by 400% since 2014 thanks to strong earnings growth, rather than a re-rate in its price to earnings multiple. Management expect it to grow strongly at double digits over the next decade, and it's the number one player in a rational duopoly, with 65% market share in its main market.
Indeed, on 23 May, Qantas shares got a lift when the company forecast it would achieve record-high underlying profit before tax of $2.4 billion to $2.5 billion for the 2023 financial year.
Soaring travel demand and record airfares are fuelling those sky-high profits. And the company expects these favourable market conditions to persist for years.
"We can say that demand will outstrip supply for the immediate future and through to the end of the decade," Qantas head of international and domestic, Andrew David, said at the airline's investor day conference.
In his bullish assessment of Qantas shares, Landau agrees.
He does expect some moderation in airline tickets over the coming years as more planes return to the sky. But he believes an ongoing increase in travel demand amid a recovery in Asia will continue to see demand outstrip supply, supporting historically high airfares.
"Qantas has a dominant industry position, great balance sheet, and on a PE [price to earnings multiple] of six, it's still a beneficiary of a structural boom," Landau said.
How have Qantas shares been tracking longer-term?
Qantas shares are down just over 4% since 21 February 2020. That was the day before the stock joined most of the rest of the market in falling off a cliff in the pandemic-fuelled selling frenzy.
Investors who bought the ASX 200 airline stock on 20 March 2020, the day it hit pandemic lows, will be sitting on gains of 162% today.
