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

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.

Challenged on the aerospace side. Transportation business is strong but both are very exposed to the overhang of weakness in Europe. Thinks there will be some significant cutbacks in spending in that whole area. CAE (CAE-T) would be a better choice.

You can see the base. It is very, very well defined. A descending triangle. You need to see a breakout above the side of that triangle. Don’t look at it until it breaks out, otherwise it could be dead money for a while.

He doesn’t see near future as being so bright. There are some major problems going on. One is how well the C series will do. Another is the negative cash flow, which has been harsh the last two quarters with about $500 million going out. Have taken on more debt, which he doesn’t like. Pays a reasonable dividend. Thinks it has a lot of upside. Could be a double. On his Buy list but will have to dig a little deeper first.

This is a call on the global story that is going to work out. It is at the bottom of its trading range of $3.50 to $4.50. There has been some selling recently because of the earnings and the conference call. You have itchy portfolio managers who don't want to sit on the stock for months so they are going to sell. Selling will probably update over the next few days and then settle down and you can start buying. Buy it in tranches, a 3rd every 3 or 4 weeks.

Challenged with the ‘C’ series. He would not go there.

7.35% bond maturing December 22/26. Is it safe? Less than investment grade and is considered as a high yield or junk bond because it is BB rated. This business is highly cyclical depending on the aircraft business primarily. If this is a big exposure in your portfolio, he would reduce your exposure. If it is less than 10% of your bond portfolio, you can keep them as long as your other securities are safer and shorter.

Have the C series which they are planning on launching but there is execution risk for the planes to get launched on time. Lack of orders, especially at the recent aerospace show, is a bit disappointing. Can't see any catalyst to get the stock going.