CAE Inc (CAE.TO)

(A Top Pick March 24/16. Up 9.97%.) This has been a frustrating stock technically, because it has a long series of lower highs. He now thinks it is above that. He is also bullish on the aerospace sector.

Fundamentally, this is in the industrial space as well as in the aerospace space. The aerospace peers are doing well. As long as he can remember, the US has been at war with somebody. Technically, this has a long series of tops of around $15.50, and it has finally broken out. With this break out, he thinks this works higher. Once you start breaking out of all-time highs, there is no cap.

(A Top Pick June 8/15. Up 12.74%.) This has appreciated a fair amount in a short period of time. Feels it is one of Canada’s leading technology companies, and they are in excellent markets, whether military or civil. Thinks there is going to be a huge renewal in their fleets and commercial systems, but also a changeover in the pilots who have to be trained. He would look to buy this at under $15.

Has always been leery about this industry. There is a lot of volatility in it. It trades along with the aerospace names, and is just not the stable stock he is looking for. Also, there are some other players in the industry, and it is really about capital.

This would be considered as part of the industrials and down into the aerospace sector seasonality, which it follows very closely. Historically the best time to own has been from around the end of January until around the middle of June. Currently the trend is slightly on the downside. There are early signs of outperformance.

This is the third or fourth time he has picked it, but he feels that eventually it has to break out. You are safer to wait for it to break out and confirm the uptrend.

(Top Pick Feb 27/15, Down 11.32%) He sold in the summer. He is not overly bearish, but he found better places for his money.

(A Top Pick Feb 27/15. Down 2.47%.) We are really in a market to protect, and not try to hit home runs. This company has done that. Has sold his holdings.

(Top Pick Dec 21/15, Down 4%) He has been waiting for it to break out. Military spending might be going up. It is outperforming. It was not damaged during the selloff. We wants to see it take out the highs.

(The background of the 3 top picks is that they are dividend paying stocks.) This is cheap. Trading at 9.6X enterprise value to EBITDA. Earnings are forecast to grow at 12% both this year and next. Free cash flow yield of 3.3%, up 125% year-over-year. 14% ROE is forecasted. Dividend yield of 1.94%.

(Top Pick Jan 6/15, Up 4.34%) He favours the industrial and aerospace sectors. $15.75 will be a break out if it does so on good volume. He sees more military spending and they are the beneficiary of that. It is one of Canada’s few choices in defense. It is outperforming the TSX and is the start of a trend that is going to last.

Moves higher from Oct to May of each year. We saw it try to bottom but there is a big zone of resistance right now. If it breaks it, it is positioned for a recovery.

In the recent quarter they did very well on the civil side, which surprised everyone. Well positioned to take advantage of the increase in new jets that are going to be sold, whether commercial or military. Selling at reasonably good multiples. Dividend yield of 2.11%.

(Top Pick Feb 27/15, Down 0.79%) He sold because it fell below others on his ranking based on his specific criteria.

$3.9 billion market cap with $280 million in cash. Pays a 2% dividend. Has a 3% free cash flow yield and 13% ROE. Trading at 9.5X EBITDA. Has a year over year EBITDA growth of 13%. A sleep at night stock. Earnings growth is expected to be 13% this year and next. Just announced $300 million in new contracts on the flight simulation side.