Q: Bombardier hit a new 52 week high. 1 year return has been 146%. Why the continuing upward move, and does this company have more upside this year? Somewhat puzzling. Would you buy at these levels? Thanks.
5i Research Answer:
BBD.B has seen a significant fundamental improvement, having been 'close to death' not that long ago. It has sold assets and now focuses on business and private jets, a sector that is booming. It has won significant new contracts. It now has a two-year backlog, providing investors with better growth visibility. There are very few Canadian choices in the sector, and as one of the few large cap choices it has gotten Canadian investor attention. There is still upside potential, but it is now not-cheap at 29X earnings. Debt is still high, and it is cyclical. We have a tough time with this one, as its history is just pathetic. But it does look better than it has in decades. Still, on valuation we would give it a HOLD.