Although it has been a volatile year for Canadian stocks, one that has been doing particularly well in recent months is that of airline company Air Canada (TSX:AC). In early April, it hit lows of around $13 per share and by the end of last week, it was around $22. Despite concerns of an economic slowdown and possibly even a recession on the horizon, Air Canada stock has been one of the best ones to own of late.

There are a couple of reasons to explain this, and why it may still rise higher.

The first is valuation. At $13, the stock was incredibly cheap - levels it was last at during the 2020 COVID crash. That helps to emphasize just how much panic and overreaction there was in the markets this year over tariffs and a trade war with the U.S.

Secondly, oil prices have been falling. Demand may slow down but as the price of oil comes down, that can help improve profitability for the airline. That can be helpful to ensure that its bottom line remains strong, even if people are scaling back on travel.

And for now, anyway, there doesn't appear to be a sharp reduction in travel plans. Through the first three months of the year, Air Canada's operating revenue declined by just 1% to $5.2 billion. While it was a decline, it wasn't a huge one.

Shares of Air Canada have been rallying but they're still not near their 52-week highs of $26.18. As a result, it may not be too late to invest in the stock today, especially if you're planning to hold on for the long haul.

COMTEX_467094828/2559/2025-07-08T05:42:58