CAE INC. $14

CAE INC. $14 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 269.9 million; Market cap: $3.8 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.1%; TSINetwork Rating: Average; www.cae.com) earned $59.4 million in its fiscal 2016 third quarter, which ended December 31, 2015. That’s up 14.0% from $52.1 million a year earlier. Earnings per share also jumped 10.0%, rising to $0.22 from $0.20, on more shares outstanding. Revenue gained 10.2%, to $616.3 million from $559.1 million. About 90% of the company’s revenue comes from foreign customers, so it’s benefiting from the lower Canadian dollar. Sales of flight simulators and pilottraining services to airlines (54% of total revenue) gained 3.9%. CAE sold nine simulators during the quarter, for a total of 39 in the first nine months of fiscal 2016. It expects its full-year total to exceed the 41 sold in fiscal 2015. CAE’s military sales (41%) rose 17.4% after it won new contracts from the U.S. and Australian air forces. Sales of medical-simulation products (5%), such as mannequins for training nurses, jumped 32.9% on new contracts from the U.S. Department of Defense. The company’s order backlog is now $6.4 billion, which is up 28.2% from a year earlier and equal to 2.6 years’ worth of revenue. CAE is our top Conservative buy for 2016.

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