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

Had bad news during the last little while with some strikes and some analysts downgrading the stock. On a technical basis it hasn’t been doing very well recently. Normally has positive seasonality from around now until April. This year it started but recently has had some struggles. It is now testing the low of its recent trading range in a market that is starting to go higher. That is not a good sign.

A stock that is not liked by anybody. Have had strikes and C series delays. Really weak revenues and margins in Q2. It might be an opportunity here for a trade or even a Buy because management stated last quarter that they thought the weak revenues and margins was more to do with the timing of certain contracts expiring and they maintain their guidance for the full year. If right, then the stock could go higher. Trading around 5.8X EBITDA. Thinks their backlogs are pretty good in both aerospace and transport. Owns this for higher risk clients.

Recently had a recent preferred (BBD.PD.B) that produced a drastic yield reduction and the price drops significantly. With current low rates, is this not a risk with all resets? This was an old-style, which he calls a Fixed Floater and they usually run for 5 years at a fixed rate. At the end of the 5 years, the company would reset the interest-rate to the current rate environment. The problem is you don’t know what the spread is until possibly only 2 weeks before. The newer style, which came out in 2008-2009, also goes for 5 years but at the beginning there is a pre-established spread that is fixed off the 5-year Canada Government Bond.

A lot of his thinking on this has to do with the C series but he really likes the fundamental transport business. Their baseline earnings right now is $.50. If you factor in the success of the C series, he thinks that gets you up to $.70 plus. Sees the stock at about $5 one year out. 3% yield.

(He owns the preferred shares, which gives him a good income.) The problem with this company is that their subway and train systems do a great job and they win contracts but their margins are so thin. Then you put the airline component on top and it is so volatile and he considers it very risky. It’s either feast or famine. There is potential there but he is not ready to put his money on it.

Thinks the C series will go and will be an important upside for the company. Feels they need to do a partnership with somebody outside of Canada. In the interim, they are selling a lot of trains. Trains are good for cash flow, not so good for earnings.

Have been announcing deal after deal lately. Latest one was $100 million of airplanes. A leader in the field. There are questions though about a $500 million cash drain in the last quarter, which is not good. C series seems to be coming online but still lots of questions with it. He is looking for a double, which is at the low end of what he normally looks for.

Not great earnings last quarter. Disappointed on the transportation side. Things were a lot better on the aerospace side. There are 2 issues here. Cash flow has to come in from internal operations and the pipeline on new aircraft must be kept open. Came out with guidance that was a lot better than it had been before.

Transport business provides a good floor to earnings. Part of money stimulating economies will be directed to transportation. Just started picking away at this and thinks there is a lot of upside. 'C' series is not being discounted into the stock price.

2026-12-28. Double B credit so not investment grade, so has some risk. Good yield pick-up. Risk is that if you see longer term yields rise this one could be hurt.

This has been a difficult story for the last number of years after being a great Canadian growth story for so many years. If it succeeds, the C series will be a big driver for them. It is facing difficulties in the business plane market. Doesn’t see any value here.

Stock price continues to decline. Within aerospace, she has decided to go with Boeing (BA-N) which serves a larger market of the aerospace area. C series launch is going ahead and should have the 1^st flight out later this year or early next year. There is a risk the launch may be delayed. There is no catalyst to get into this name.

This is a very pathetic stock. It is at its support that we saw back in 2011. On a downward trend. Volume is completely drying up. If it broke down below $3.40, he can see it down to $3 again.

Last quarter was pretty weak. Disappointing news on the transport side and on the aerospace side everyone is waiting for the C Series jet to come through. Thinks it will trade in a range until they have some orders. Looks inexpensive but when you consider the BV of about $.45, you are paying a huge multiple for a stock and he just doesn’t know if there is any big upside. (See Top Picks.)

A classic Canadian company that has managed to hold its own despite extremely difficult markets. The markets it is really good at, trains and subways, is a very low margin business. The growth part, aerospace, has a lot of competition. He likes their preferred shares, which has a pretty reasonable dividend.