Bombardier Inc (B) (BBD.B.TO)

Great company. The valuation is where it is because of the uncertainty of the C series and how many planes they are going to sell. When you build a new plane from scratch, you put a lot of capital into it. You have to load up your balance sheet with debt, which increases the risk profile. He is confident that the company will be up to sell the planes but there is a lot of competition. Because of their balance sheet, he is happy to sit on the sidelines for now.

Industrials find a period of seasonal strength from Oct 28 all the way through to May 5. Technically, the chart shows a bear flag at around its 200 day moving average. Chances are, it could break lower. It has broken. A trend of higher highs and higher lows since the beginning of the year. It is best to wait until technical confirmation is given on this one. (See Top Picks.)

Not a buyer of this. Margins for Q3 were 4.3% versus 5.2% last year. Transportation margins were 6% versus 6.3% last year. Leverage is too high and free cash flow is too weak. Stock is cheap and trades at a discount of 15% to its global peers, but given the week margins and the C series execution risks, he wouldn’t buy it.

Closed at $5.30 and then opened up the next morning at around $5. When you have those gaps, the stock is usually going to spend some time filling it in and finding support. It sort of stopped at a congestion zone. If you don’t own, around $4.55 is a good support level.

Had somewhat disappointing earnings recently. A lot depends on announcements relative to the C series and additional orders and their entry into service. On a longer-term view, such as 3 years, now is probably a good entry point.

Has a fair bit of upside, but debt load has increased and there were delays in the ‘C’ series. Still pays a nice dividend. There are questions about how much more the ‘C’ series is going to cost. If they had to take on more debt then he would become wearier and might sell. You have to watch the cash flow on this one.

Sell Bombardier (BBD.B-T) and Buy Home Capital (HCG-T) and come back to Bombardier in 6 months or so? He feels that this is a way better buy than Home Capital. Home Capital has done very well. At some point the Canadian housing cycle is going to slow and all the marginal loans and the marginal people that have these loans are going to get into trouble. At some point we are going to see that multiple capped on Home Capital.

(Market Call Minute) Plagued by weak earnings and very dependent on the ’C’ series.

(Market Call Minute.) If this does well with its new C series jet, it should do well. He would prefer Transat (TRZ.A.T or TRZ.B-T)

This company took a big bet in terms of being able to get their stock price moving. Historically, he always had a rough rule of thumb of picking this up under $4 and selling it over $6. This will be changing because the nature of the business is changing. Transportation, outside of air, is moving steady and actually getting progress. But, the C series is really the game changer. Orders have been slow on this but over the long-term they are going to be able to show the benefits of this plane. The issue is, are they going to be able to be competitive enough to keep margins that can trickle down to their bottom line. Thinks there is upside on 3-5 years out, but there will be some choppiness quarter to quarter. 1.9% dividend.

(Market Call Minute) Wants to see more orders for ‘C’ series.

(A Top Pick Dec 31/12. Up 45.26%.) Feels that aerospace is a dominant theme and the place to be. It’s a brave new world out there. Airlines are upgrading. He thinks this will break out and work higher.

A lot is being built into the expectations with respect to the sales on the C series of jets. That has yet to meet expectations. He would be a little bit wary about jumping in right now. Also, this is a somewhat levered company which is of some concern if we see rates start to go up.

Waiting for the C series to get off the ground and with the delays along with everything else, he did not take a position in this one. (Stock has shown that other people have more faith.) On the basic business, rolling stock of subways and trains, they do an excellent job but it is very low margins. The risk on the airline side is fairly high. Have just signed some contracts for some sales and it may be that this is the time the stock will really take off.

He is following it. The fate of the ‘C’ series is important. Needs to see more flights. Transportation side of the business is good even if low margin. He would wait for a pullback. $4.75