David BaskinCAE IncCAE.TOCOMMENTJul 15, 2013

Overbuilt number of simulators. Bit of a turnaround, restructuring. Still screens a little expensive. Other companies in the sector have cleaner growth stories. Not looking to own.

He added some recently. Just renewed US contract, despite Trump's statements. Their products are just so integrated. Should benefit from improvements in rejigged commercial division. Canadian industrial companies that specialize in defense spending will be at the front of the line to benefit from increased fiscal spending in Canada.

Would seem to be a steady, secular grower. Long-term demand for pilot training is increasing on both civil and defense sides. Business is much more variable for reasons than he can't understand.

Management changes. Checks all the boxes except paying a dividend, still holding. Long-term contracts provide stable revenue. In an environment where valuations are so high, it's nice to be able to buy a name like this with confidence.

Somewhat of a train wreck recently. Core business of training pilots hasn't gone away. New CEO is trying to pivot company to higher-growth sectors, such as defense -- if that's your thesis, then this might be one to look at.

He'd wait for more of an indication that the turnaround is secure.

Technical structure looks muted. Stock's below 200-day MA, which has started to move lower. Trades at 30x PE, for 13% growth -- a more than 2x PEG ratio. Bit expensive for him. 2027 guidance is modest, in single digits. 

Worries of jet fuel prices spiking because of the US-Iran war, but new aircraft roll-outs remain strong which demands new pilot training. Also, the business jet market remains strong. Plus, CAE continues to win defence projects. Recent guidance, though, disappointed investors. Free cash flow should restore the dividend.

Doesn't pay a dividend. Shares traded down along with the airlines, given rising oil prices. CAE trains pilots and pilots need training, the airlines have a pilot shortage. Is defensive.

A lot of the aerospace companies have had tremendous runs. Commercial aircraft growth plus increase in defense spending contributed to the gains.

Don't worry about short-term volatility. More important to focus on what's to come. Aerospace sector has huge demand moving forward, as we're seeing countries around the world increase defense spending.

Broke resistance from 2021, and that's great to see. Breakouts are great -- they mean that all the sellers around the breakout point are gone. Now stock can move on to newer highs, which it's doing. Good-looking chart.

One of only 2 names they own that doesn't have a dividend, so they have to be extra-convicted on the stock price. Its 2 sectors should work in investors' favour over the long run. Flight simulators for pilots amidst a pilot shortage. Defense side has been suffering, but PM Carney has announced significant increase in defense spending. 

Secular growth should outpace any short-term weakness in the economy. No dividend.

Earnings good, guidance disappointed. But she takes a long-term view. One of the few stocks she owns with no dividend. Checked the boxes of recurring revenues, stable business. Still a pilot shortage in NA, geopolitical risks favour the defense segment.

Management did exactly what it said it was going to. Increased margins on the defense side from about 4% to 8%. All the geopolitical risk doesn't hurt. Both civil and defense segments now doing well.

They make simulators for both commercial planes and fighter jets. That's how he's playing increased defence spending in Canada.

He models 22% growth at 23x PE. Normally he'd like it, but it's had too big of a move from the fall. Not convinced it'll hit target numbers. Less exposed to tariffs.