Magellan Aerospace (MAL.TO)

Like others in the aerospace parts manufacturers, it is in a pretty good space because the number of plane orders is going up and you are going to see continued growth in revenue streams. It has really gone sideways for most of last year. There doesn’t seem to be any signs of a roll over yet.

This is a classic Canadian exporter. They were hurt really hard when the Cdn$ was at $1.07. Since that time their margins have lifted and expanded nicely. Revenues have grown. Aerospace backlogs go out another 5 years. Trading at 10X earnings. Yield of 1.64%.

(A Top Pick Nov 12/14. Up 1.57%.) He really likes this because the demand for aircraft parts is still tremendous. A great Canadian story that is not about financial services, energy or materials.

(Top Pick Jan 10/14, Up 67.01%) It was knocked down the week before he came on, to dumb levels. They have been buying back their debt aggressively and now they are raising their dividend. This is going to play out for a long time here.

(A Top Pick Jan 10/14. Up 71.81%.) The fall in the Cdn$ and the rise in the US$ are going to make manufacturers, especially Canadian ones, very attractive. This company had the added leverage of debt on their books, which they have not paid off a lot of. There was also multiple expansion. Recently sold some of his holdings, but would add back to it below $12 and would take it off closer to $14.50-$15.

Bombardier (BBD.B-T) has had its struggles. Has to both develop a product and sell it. This company has some very high quality products and can play both sides off against the middle. They supply everybody. Demand for new aircraft has been significant. The concern is that with energy prices coming lower, a lot of what has driven the demand for new aircraft is the new fuel efficient designs that a lot of manufacturers have incorporated. Dividend yield of 1.62%.

He likes it and has recommended it on BNN. The multiple has not yet caught up to how good the story is. It is growing its earnings at about 15%. Canadian dollar revenues and US$ expenses with margin expansion and they are delevering their balance sheet. Thinks you will see better dividends, share buybacks and growth next year as well as a multiple expansion.

An Aero supplier and parts business. Doing quite well right now because of high demand.

A prime candidate for what you want to be looking for in Canada. Manufacturer that is steeped in Canadian dollar labour. Trade at 5-6 times. Management is really positive on what is going on right now.

Stock has been behaving strangely. Very thinly traded, so when someone decides to Buy or Sell, they can knock it around quite a bit. He has been buying at around $7.50 or a little bit lower. This should do very well because a lot of their revenues are US-based and their labour costs are Canadian. He would suggest that you average in.

We haven’t actually seen the positive leverage of a weak Cdn$ versus a strong US$ actually play out in manufacturers. This is likely where earnings prices are going to be and will likely play out over the next several years. He likes aerospace. Have operating leverage as they have a lot of hard fixed assets, as well as financial leverage. Yield of 1.55% and trading at less than 5X EBITDA versus the groups of 7.5-8 times. Very cheap.