bbd a

CGI GROUP INC., $57.32, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. It helps its clients automate certain routine functions such as accounting and buying supplies. That makes companies more efficient and lets them focus on their main businesses. In its 2016 second quarter, which ended March 31, 2016, CGI earned $268.3 million. That’s a 6.8% increase from the $251.2 million it earned a year earlier. Per-share profits gained 10.3%, to $0.86 from $0.78, on fewer shares outstanding. That missed the consensus estimate of $0.88. In the latest quarter, higher revenue in France, the U.K. and parts of Asia offset declining contributions from CGI’s U.S. defense clients. Revenue improved 5.7%, to $2.75 billion from $2.60 billion. The consensus forecast had been $2.74 billion. The weaker Canadian dollar also helped to lift revenue, contributing an extra $173.7 million....

BOMBARDIER INC., Toronto symbols BBD.A $1.84 and BBD.B $1.62, announced this week that Latvia-based Air Baltic has exercised its option to buy seven more of the company’s new CSeries passenger jets. The client had previously ordered 13 planes. Bombardier will begin to deliver the aircraft by the end of 2016. The company now has firm orders for 250 CSeries planes. Based on the list price for the aircraft, these orders are worth $18 billion (all amounts except share prices in U.S. dollars). To put that in context, Bombardier’s total revenue was $18.2 billion in 2015. However, the company typically offers discounts to customers that buy multiple planes. So the total value of its CSeries backlog is probably much less than the list price. OUR RECOMMENDATION: Bombardier is still a hold....

BOMBARDIER INC. (Toronto symbols BBD.A $1.52 and BBD.B $1.43; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $2.3 billion; Priceto- sales ratio: 0.2; Dividend suspended in February 2015; TSINetwork Rating: Speculative; www.bombardier.com) is the world’s third-largest maker of commercial aircraft, after Boeing and Airbus. It’s also a leading maker of passenger railcars. The company recently formed a joint venture with the government of Quebec to build its new CSeries passenger jets. Under the deal, the province will pay $1.0 billion for 49.5% of this business (all amounts except share prices and market cap in U.S. dollars)....

Bombardier and BlackBerry (see box) continue to struggle with strong competition and shrinking sales. However, both are developing new products that should spur growth. As well, their sizable cash holdings help cut their short-term risk. BOMBARDIER INC. (Toronto symbols BBD.A $1.52 and BBD.B $1.43; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $2.3 billion; Priceto- sales ratio: 0.2; Dividend suspended in February 2015; TSINetwork Rating: Speculative; www.bombardier.com) is the world’s third-largest maker of commercial aircraft, after Boeing and Airbus. It’s also a leading maker of passenger railcars. The company recently formed a joint venture with the government of Quebec to build its new CSeries passenger jets....

CANADIAN TIRE CORP., $129.83, Toronto symbol CTC.A, saw weaker sales in the latest quarter, as warmer-than-usual weather hurt demand for winter goods such as snow shovels and tires. Lower gasoline prices also dampened revenue at its gas stations. The company’s overall sales fell 7.5%, to $3.4 billion from $3.7 billion. Cost controls and lower marketing costs boosted company earnings, despite the revenue fall. In the three months ended January 2, 2016, the company earned $225.2 million, up 8.1% from $208.3 million a year earlier. Earnings per share gained 13.6%, to $3.01 from $2.65, on fewer shares outstanding, easily beating the consensus estimate of $2.55....

In next week’s Successful Investor Hotline, we’ll reveal our top stock picks for 2016. Don’t miss this unique opportunity to profit. TRANSCANADA CORP., $43.47, Toronto symbol TRP, has launched two legal challenges to the U.S. government’s recent decision to block its proposed Keystone XL pipeline, which would have pumped crude oil from Alberta to the U.S. Gulf Coast. The company spent $4.3 billion on Keystone XL and now expects to write off between $2.5 billion and $2.9 billion of this total. To put these figures in context, TransCanada’s market cap (or the value of all outstanding shares) is $30.8 billion....

CANADIAN PACIFIC RAILWAY LTD., $198.88, Toronto symbol CP, has offered to buy U.S.-based railway Norfolk Southern Corp. (New York symbol NSC). The combined firm would be North America’s largest railway, with more than 56,000 kilometres of track. Buying Norfolk would also give CP greater access to ports on the U.S. Gulf Coast and Atlantic Ocean. Norfolk shareholders would receive $46.72 U.S. a share in cash and 0.348 of a CP share (or roughly 50% in cash and 50% in stock). That would give them 41% of the combined company....

BOMBARDIER INC., Toronto symbols BBD.A $1.50 and BBD.B $1.42, announced this week that it will form a new joint venture with the government of Quebec.

Under the deal, the government pay $1.0 billion for 49.5% of a partnership that will own the CSeries passenger jet business (all amounts except share prices in U.S. dollars). Bombardier will own the remaining 50.5%.

The company is also giving Quebec warrants to buy up to 200 million class B subordinate voting shares at the U.S. dollar equivalent of $2.21 (Canadian) each. The warrants expire in five years. If Quebec exercises all of them, the extra shares would equal 8.18% of the total class A and B shares currently outstanding.

Bombardier has also promised to keep its headquarters and CSeries plants in Quebec for the next 20 years.

The cash from this sale will help Bombardier finish certifying the CSeries; flight tests are now 97% complete. Quebec’s backing should also help attract more buyers. The company has firm orders for 243 CSeries planes but hasn’t received any new orders in the past year.

...

CANADIAN PACIFIC RAILWAY LTD., $202.17, Toronto symbol CP, reported lower freight volumes in the latest quarter, mainly due to falling prices for oil and other commodities, but the railway still reported better-than-expected results. In the three months ended September 30, 2015, CP earned $427 million, up 6.8% from $400 million a year earlier. Per-share profits jumped 16.5%, to $2.69 from $2.31, on fewer shares outstanding. These results exclude unusual items, such as gains on asset sales. On that basis, the latest earnings beat the consensus estimate of $2.67. Revenue gained 2.3%, to $1.71 billion from $1.67 billion, also beating the consensus forecast of $1.69 billion....

LINAMAR CORP., $70.26, Toronto symbol LNR, has offered to buy 100% of Montupet SA, a French maker of aluminum car parts with plants in Europe, North America and Asia. The company will pay $1.16 billion for Montupet’s shares and will assume $97.5 million of its debt. The deal’s total value—$1.25 billion—is equal to 27% of Linamar’s $4.6-billion market cap (the value of all outstanding shares). Linamar will borrow the cash it needs for this purchase, which will increase its long-term debt from $581.3 million (as of June 30, 2015) to around $1.8 billion. That’s a high, but still manageable, 39% of Linamar’s market cap. The new operations will immediately add to the company’s cash flow and earnings, helping it pay down the extra debt....