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

2 major problems. 1.) When is the C series going to get off the ground? 2.) Negative cash flow. Just sold $2 billion of bonds which, on the one hand puts them in good stead. On the other hand a red flag for him because it makes it much more risky. Debt load is about $7 billion which is pretty hefty. Currently has it as a Buy but wants to re-examine to see if the debt load scares him off.

Would not touch it. But it seems to be doing well. Not for him. There’s a lot of debt. Too competitive for him.

Owns some preferred shares in this company. He is not as enthused on this company as some people are. Some of their core businesses do well, basically the railway. Series C is still up there and we still don’t know how well they are going to do on that and this is a huge bet.

Recently just doubled his position. Yield curve is starting to steepen. You want to be in companies that are going to be growers in the future, not just safe stocks. Trading at a really good valuation at almost 10X next year’s earnings. C series has been well discounted in the stock. Margins in business jets could be well north of 15% in this next cycle. Could easily be a double in the next 3-4 years.

There has been a reasonably good short-term movement from mid-November to the present of an upside trend. Looks like it has some upside for the time being.

Likes this company. Have been getting some very strong orders from the aircraft side and on the training side. Aircraft side is where they make their margins and the train side is good for cash flow. He would not sell the stock below $4. The market for planes, particularly in Asia, is very strong. Their new planes are very fuel efficient which will be a big positive for them.

(Top Pick Jan 6/12, Down 7.30%) Likes it. It is forming a base. It is trying to break out above $4.85. He is bullish in aerospace. When it sold off two weeks ago it was a nice bottom and a buying opportunity. It’s a must own.

2 major problems. Are they going to get the C series up and off the ground and when? Another postponement would not be good. Also, negative cash flow is hurting them. At the same time, they have been reporting some tremendous sales in both the aerospace and train divisions. This could potentially help the cash flow. His target price is towards $7.

Trading at only 7-8 times forward earnings. Obviously the risk is that the C series has problems but he is betting that it gets off the ground. The recent orders they picked up from Delta and an unknown overseas name, are positive. The private jet division continues to do well. Doesn’t have a major debt repayment until 2016.

On her watch list. Recently announced a big jet order. C series will be launched over the next couple of years.. Typically when a manufacturer announces a new model, there could be risks as to timing and manufacturing problems that could be encountered. Feels this is an overhang. As the economy picks up she would expect their global jet business to improve. Would like to see a few more C series announcements and wait until closer to the launch.

Seem to be doing really good business lately but the market doesn’t seem to agree. The trend is down and continues to make lower highs and lower lows. If you own, look for a rally and then abandon ship.

Tough call. Long term there is value here. For new money you can start to accumulate. In the next 6 months there is probably not a lot of good news coming.

(Market Cal Minute) Book value is $0.79.

It is a very levered company so from a balance sheet perspective he does not spend a lot of time looking at it. Delays with ‘C’ series. If much more delay they could miss the market relative to the competition. The market is telling you it is in a speculative phase.

Had a tough slog. The issue in the short term was a billion dollar bond issue. The ‘C’ series has been delayed. He prefers others.