The star Aussie stockbroker who picked the bottom for Qantas thinks it's time to sell

Miranda Kerr with Alan Joyce unveiling the airline’s new uniforms in 2013. Photo: Getty / File

Bell Potter’s Charlie Aitken says it’s time to sell Qantas after the airline’s return to profitability.

The airline beat expectations yesterday with its $367 million underlying reported profit, a spectacular turnaround from the record losses announced last year.

The staff layoffs and the retirement of costly old planes have completely changed the airline’s cost base and margins have been helped by falling oil prices and solid domestic and international demand. The stock has soared in the last six months as a result.

But now Aitken says it’s time to cash in. From his note today:

Qantas Airways (QAN) has been my single best “trading idea” of the last 14 months. From a low point of 95c back in December 2013 QAN shares have gained +200%. Today I am recommending “taking trading profits” in QAN.

Airlines are trading stocks: always have been, always will be. They are not long-term investment grade in my opinion due to the fact they control very few of the variables in their business.

QAN was clearly undervalued at the bottom of its earnings & sentiment cycle, yet today it is fairly valued with optimistic sentiment and that means from a trading perspective it is the right time to be locking in the substantial capital gains and look for other ways of making our capital work hard for us.

Pretty much everything went right for us in this QAN “trading idea”. The Oil price collapsed, the AUD collapsed, the domestic capacity war ended and QAN’s earnings recovered as confirmed in yesterday’s interim earnings result.

The stock is up 2.8% today to $2.93.

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