Opinions Peter Imhof
Magellan AerospaceMAL.TOPAST TOP PICKDec 21, 2017
Peter ImhofStock price when the opinion was issued
As of Sep 03, 2026. Market Open.
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Premium contentOur PAST TO PICK with MAL has triggered its stop at $34. To remain disciplined, we recommend covering the position at this time. When combined with previous guidance, this will result in a net investment gain of 50%.
Canadian aerospace and defense in Canada is one of the biggest fields. It has contracts with Airbus and Boeing and the structural demand is there for years. It can grow at 20% per year for years to come. There is a very big structural change on the defense side where Magellan has a lot of spare capacity for defense applications. He sees much more room for EBITA margin improvement and the ability to fill excess capacity with better quality.
Buy 3 Hold 0 Sell 0
Andrey OmelchakPremium contentPremium contentWe again reiterate MAL as a TOP PICK. The company is front and centre on defense projects in Canada, including maintenance for the new Swedish fighter jets and development of light anti-tank weapons for the Canadian Federal government. Cash reserves are growing while debt is retired and shares bought back. We continue to recommend a stop at $29, looking to achieve $42 -- upside potential of 18%. Yield 0.5%
(Analysts’ price target is $41.50)Premium content
Seeing decade-long demand. Huge demand in defence, plus big aircraft parts replacement cycle. Lots of spare capacity, so new work comes with high, incremental margins. As a result, big pickup in FCF generation. Yield is 0.67%.
(Analysts’ price target is $38.75)Andrey OmelchakPremium contentWe again reiterate MAL as a TOP PICK. The Canadian company sees its defense industry products having lots of runway ahead. Recently reported earnings showed a 52% increase in net income over the year, growing cash reserves and they plan to continue to buy back shares. We recommend trailing up the stop (from $22) to $26, looking to achieve $41 -- upside potential over 30%. Yield 0.6%
(Analysts’ price target is $41.50)Premium content
High insider ownership, so company is relatively undiscovered. One investor owns more than 50% of the company -- so it doesn't screen well for institutional investors. Business is booming.
Defense (~30% of its business, and he anticipates 45-50% in future) and aerospace. Good backlog. Seeing record requests for proposals, especially on defense. Huge operating leverage to get higher margins, which will increase FCF. One of the cheapest in the sector within NA. Yield is 0.83%.
Andrey OmelchakPremium contentWe reiterate MAL as a TOP PICK. Recently reported earnings demonstrated growing cash reserves, while debt was retired and shares bought back. Purchasers of their airplane components have large backlog orders from 2025 leftover and spending on defense aviation is expected to grow. We recommend trailing up the stop (from $18) to $20, looking to achieve $29 -- upside potential of 20%. Yield 0.8%
(Analysts’ price target is $28.00)Premium contentWe reiterate MAL as a TOP PICK. As a Canadian based aerospace developer the recent Federal government military spending plans will be positive. It trades at 25x earnings and under 2x book. Latest reported cash reserves are growing, while debt is retired and shares bought back. We continue to recommend a stop at $18.00, looking to achieve $25.50 -- upside potential over 15%. Yield 0.9%
(Analysts’ price target is $24.00)Premium contentPremium contentWe reiterate MAL, the Canadian based aerospace company with global market reach as a TOP PICK. Just over one-third of revenue is derived from defense spending. They are providing key engine components for South Korea and are involved with the Gripen fighter that Canadian is considering for purchase. It trades at 27x earnings and 1.3x book. Previously reported earnings showed good cash reserve growth, while they retired debt and bought back shares. We recommend trailing up the stop (from $13.00) to $15.50, looking to achieve $22.00 -- upside potential of 23%. Yield 1.1%
(Analysts’ price target is $22.00)
(A Top Pick Feb 28/17. Up 17.83%.) A very low multiple stock. Trades at around 11.5-12×2018 earnings. Part of the reason is that there is not much liquidity with the company. All the other companies in this space trade at around 18X earnings. There is a good chance this company may eventually get taken out. He is going to continue to hold.