bombardier

BOMBARDIER INC. (Toronto symbols BBD.A $5.08 and BBD.B $5.06; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $8.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.0%; TSINetwork Rating: Average; www.bombardier.com) is the world’s third-largest commercial aircraft maker, behind Boeing and Airbus. It is also the world’s leading passenger railcar manufacturer.

The company has postponed the first test flight of its new CSeries passenger jet. It had planned to begin flight tests in June, but it needs extra time to upgrade the plane’s software.

Bombardier has firm orders for 177 CSeries jets, plus options for 211 more. If the buyers exercise all these options, the resulting 388 orders would be worth $26 billion (all amounts except share prices and market cap in U.S. dollars).
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BLACKBERRY LTD., $9.08, Toronto symbol BB, fell 16% on Friday after the company announced that it will cut 40% of its workforce due to slow demand for its new BlackBerry 10 smartphones. In its fiscal 2014 second quarter, which ended August 31, 2013, BlackBerry sold 3.7 million phones. That’s down from 7.4 million phones a year earlier. BlackBerry will also write down the value of its unsold phones. As a result, it expects to report a loss of between $950 million, or $1.81 a share, and $995 million, or $1.90 a share, in the second quarter (all amounts except share price in U.S. dollars). If you exclude unusual items, it will still lose between $0.47 and $0.51 a share....

BOMBARDIER INC. (Toronto symbols BBD.A and BBD.B; www.bombardier.com) is the world’s third-largest commercial aircraft maker, behind Boeing and Airbus. It is also the world’s leading passenger railcar manufacturer. The company has just completed the first test flight of its new CSeries passenger jet. The test flight was a success. It had planned to begin flight tests in June, but needed extra time to upgrade the plane’s software....

We include these three manufacturing companies in our Aggressive Growth Portfolio, mainly because they operate in industries that are particularly vulnerable to swings in the overall economy. Even so, all three are market leaders with strong growth prospects. They also trade at attractive multiples to earnings.

BOMBARDIER INC....

TransDigm Group, $143.09, symbol TDG on New York (Shares outstanding: 52.4 million; Market cap: $7.5 billion; www.transdigm.com), is a leading maker of parts for commercial and military planes. The company’s main products include ignition systems and engine technology, pumps and valves, electric motors and generators, batteries and chargers, latching and locking devices, cockpit security systems, displays, seatbelts, lighting and control technology. In the three months ended March 31, 2013, TransDigm’s revenue rose 10.0%, to $465.6 million from $423.5 million a year earlier. Excluding one-time items, earnings per share gained 5.5%, to $1.74 from $1.65....

LOBLAW COMPANIES LTD., $48.39, Toronto symbol L, is buying Shoppers Drug Mart Corp. (Toronto symbol SC), which operates over 1,240 drugstores across Canada. Under the deal, Shoppers investors can choose to receive $61.54 in cash or 1.29417 Loblaw common shares and $0.01 cash for each Shoppers share they hold. Loblaw will cap the cash portion, so Shoppers investors will probably wind up with $33.18 in cash plus 0.5965 of a Loblaw common share. Based on today’s share price, the deal is worth $12.5 billion. This is a big purchase for Loblaw, which has a market cap (or the value of all its outstanding shares) of $13.6 billion....

BOMBARDIER INC. (Toronto symbols BBD.A $4.68 and BBD.B $4.67; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $7.9 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.1%; TSINetwork Rating: Average; www.bombardier.com) plans to begin test flights of its new CSeries jet planes by the end of June 2013.

The company’s plan to test the plane both in flight and using simulators should let it deliver the first CSeries in mid-2014.

The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield.
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ALARMFORCE INDUSTRIES, $10.41, symbol AF on Toronto, reports that its sales rose 9.1% in the three months ended April 30, 2013, to $11.9 million from $10.9 million a year earlier. The company earned $1.3 million, or $0.11 a share, compared to a loss of $238,021, or $0.02 a share. AlarmForce’s revenue rose along with its subscriber base: the company ended the quarter with 31,200 U.S. customers, up 22.8% from 25,400 a year ago. In Canada, it now has 106,500 subscribers, up 1.8%. The company’s earnings rose because it spent a lot less on marketing than in the year-earlier quarter, when it increased its advertising spending as it launched its VideoRelay system. This service lets subscribers watch their homes through computers and smartphones....

TIM HORTONS INC., $55.01, Toronto symbol THI, moved up this week after U.S.-based activist investor Scout Capital Management said it now owns 5.5% of the company’s shares. The announcement follows last month’s news that another investment firm, Highfields Capital Management, had pressured Tim Hortons to unlock shareholder value by buying back shares and selling some of its operations. Highfields owns about 4% of the company. These two investors also want Tim Hortons to slow down its plan to expand in the U.S., where it faces strong competition from larger chains like McDonald’s, Starbucks and Dunkin’ Donuts. However, the company still expects to open 70 to 90 new outlets in the U.S. this year. As of March 31, 2013, it had 3,453 coffee-and-donut stores in Canada, 808 in the U.S. and 27 in the Persian Gulf....

BOMBARDIER INC. (Toronto symbols BBD.A $4.68 and BBD.B $4.67; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $7.9 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.1%; TSINetwork Rating: Average; www.bombardier.com) plans to begin test flights of its new CSeries jet p...