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Regular readers should have figured out by now that Fastjet (LSE:FJET) is one of my favorite stocks to watch. I’ve been watching the ADVFN message boards for the past several weeks and have enjoyed the banter over Fastjet. Who would believe that a company whose share price is in the 3 pence range would create so much controversy amongst wags who apparently have little to do but castigate others for their divergent opinions? That’s not to say that Fastjet is not worthy of the chatter. Either you find Fastjet attractive or you are scared out of your investment wits by it.
Fastjet has had its share of ups and downs all year long, but it looks like it is positioned to take off in 2014, having ended 2013 well. On the second short day of trading within seven days, the stock was up 15.8% to 3.68, extending the upswing that began on 17 December with the publication of the company’s operational report for the month of November. On that date its share price was 2.54. That is a 45% increase over a fortnight.
It’s not the volatility of the share price that seems to put the fear of flying into some so much as it is the ability of the company to become profitable before it runs out of cash, something which it has relatively little of to cover its operations and expansion plans. On 03 December it drew down £1.3 million on its equity financing facility. That might scare some balance sheet monitors, but one must keep in mind that there is a reason that companies have such financing facilities.
I truly believe – but then, who asked my opinion? – that the story of Fastjet is what puts the financials in perspective. If I were looking only at the financials, I can almost assure you that I would have little interest in Fastjet. But I like their story. I believe in their venture. I believe in their plan. I believe in their leadership. I believe that they will succeed. I believe that they are succeeding.
On the few flights that the airline operates, it has been gleaning admirable load factors in excess of 70%. It has been successful in establishing its long-hoped-for route to Johannesburg and is preparing to fly to Lusaka, Zambia commencing in February, as it continues to establish a growing international presence on the African continent.
CEO, Ed Winter noted recently that “over the past 12 months we have established a reputation for reliability and punctuality unprecedented in African aviation, giving our customers the confidence to plan ahead and book seats early. Our brand is now one of the best known in Tanzania and is becoming increasingly recognised throughout Africa. Our customers rate all aspects of our service as excellent and on Facebook we are the most “liked” airline in Africa. Most importantly, we believe we have stimulated demand by making air-travel accessible to more people with many of our customers being first-time flyers.”
I note with interest that nearly 82% of our ADVFN “User Sentiment” rates Fastjet as a Buy. And yes, that includes my sentiment. I believe their story.
