Ann: Q2 2021 Traffic and Revenue Update, page-5

If you're looking for a counterargument, the main potential negatives I see would be either if inflation and interest rates start to rise after all the lockdown QE; or if road usages falls significantly due to either renewed lockdowns or economy stagnation.

As a long-term infrastructure play ALX carries a huge amount of debt so if there's a risk the rates on their debt might climb faster than their ability to raise tolls/increase revenue then it might get ugly quickly. The good news is that I think the first risk seems relatively unlikely. If you go through the most recent results there's a few slides where they review their debt and in the conference call they talked about how a large portion of their tolls and interest rates are inflation-linked to hedge against the exact risk I've mentioned.

The second risk - simply that less people use their roads - doesn't really have any kind of hedge, so this is the one you need to make a personal assessment on. Delta strain of covid was a bit of a setback but Europe has mostly rolled on, but it's certainly not hard to imagine some even more virulent new strain emerging that really shuts things down hard. How likely is that? That's probably pure speculation even for the scientists, but with rising vaccination rates I think it's fair to expect that massive economy-wide impacts are unlikely - as we've seen with delta, it's more infectious but vaccination means the proportion of deaths and severe cases has been lower so life can go on.

My thinking is that ALX is never going to go to the moon and make rapid 500% gains, but it's a defensive stock that makes a good core portfolio holding and at the moment I think there's more potential SP upside than these kind of stocks usually offer. I think we could see 15-30% upside to the SP over the next ~2yrs as the world openes up more fully, that plus the steady yield would be a strong return from a low volatily/low risk holding.