bombardier

RIOCAN REAL ESTATE INVESTMENT TRUST $27(www.riocan.com) is raising its monthly distribution by 2.2% with the January 2013 payment, to $0.1175 a unit from $0.115. The new annual rate of $1.41 yields 5.2%. This is the first increase since 2008. Buy.

SNC-LAVALIN GROUP INC....

BOMBARDIER INC. (Toronto symbols BBD.A $3.43 and BBD.B $3.28; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 3.0%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 56 of its Global business jets from Switzerland-based VistaJet. This deal is worth $3.1 billion (all amounts except share price and market cap in U.S. dollars). If VistaJet exercises all of its options, the order would rise by 86 planes, for a total value of $7.8 billion. That’s equal to 43% of Bombardier’s 2011 revenue of $18.3 billion. The company will begin delivering these planes in 2014.

The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield.

Bombardier B stock is a buy.

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PLEASE NOTE: This is our last Hotline for 2012. Our next Hotline will go out on Friday, January 4, 2013. RESEARCH IN MOTION LTD., $10.86, Toronto symbol RIM, reported a lower-than-expected loss in its latest quarter. Its revenue matched the consensus estimate. However, due to its falling share of the smartphone market, RIM has had to cut the fees it charges wireless carriers to use its proprietary messaging network. RIM earns higher profits from this service than selling hardware, so lower fees will hurt its profitability. That’s why the stock fell 22% today....

Pat McKeough responds to many personal questions about stock investing and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week, one Inner Circle member wanted to know about Héroux-Devtek. This Canadian company has carved out a special niche for itself in the aeronautical business. Pat balances the drawbacks of operating in a highly cyclical industry against the company’s long-term contracts with military and commercial clients. ...

Héroux-Devtek Inc., $12.74, symbol HRX on Toronto (Shares outstanding: 30.8 million; Market cap: $392.4 million; www.herouxdevtek.com), is the world’s third-largest maker of landing gear for aircraft, particularly helicopters and small jets. The company also makes metal enclosures for airborne radar and other electronic equipment. Its commercial customers include Boeing, Sikorsky, Bombardier and Embraer. The company also sells its products to military clients. Héroux-Devtek gets about 70% of its sales from outside Canada. In August 2012, Héroux-Devtek sold its Aerostructure (parts for wings and fuselages) and Industrial Products (power-generator components) businesses for $232.0 million. The sale will let the company focus on its landing gear operations....

BOMBARDIER INC. (Toronto symbols BBD.A $3.43 and BBD.B $3.28; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.4 billion; Price-to-sales ratio: 0.3; Dividend yield: 3.0%; TSINetwork Rating: Average; www.bombardier.com) has received a firm order for 56 of its Global business jets from Switzerland-based VistaJet. This deal is worth $3.1 billion (all amounts except share price and market cap in U.S. dollars). If VistaJet exercises all of its options, the order would rise by 86 planes, for a total value of $7.8 billion. That’s equal to 43% of Bombardier’s 2011 revenue of $18.3 billion. The company will begin delivering these planes in 2014. The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield. Bombardier B stock is a buy.

WESTJET AIRLINES $18.55 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1- 877-493-7853; www.westjet.com; Shares outstanding: 126.9 million; Market cap: $2.4 billion; Dividend yield: 1.7%) reports that its revenue rose 11.8% in the three months ended September 30, 2012, to $866.5 million from $775.3 million a year earlier. Earnings jumped 79.9%, to $70.6 million from $39.3 million. That’s a new record for the second quarter. The higher revenue pushed up the company’s earnings. WestJet aims to start up its new shorthaul Canadian regional airline, which it has now named WestJet Encore, by the end of 2013. Encore will serve smaller centres with Bombardier turboprop planes....

WESTJET AIRLINES LTD., $18.17, symbol WJA on Toronto, reports that its revenue rose 11.8% in the three months ended September 30, 2012, to $866.5 million from $775.3 million a year earlier. Demand for the company’s flights remains high, and it has entered into new partnerships with other airlines; these were the main reasons for the increase. WestJet’s load factor rose to a record 84.6%. Load factor is the percentage of available seats that are occupied by paying passengers. More important, the rise came despite the fact that the company increased its capacity by 2% to meet higher demand....

BOMBARDIER INC., Toronto symbols BBD.A $3.51 and BBD.B $3.43, is having trouble getting enough parts from suppliers to build its new CSeries passenger jet. As a result, the company has delayed the new aircraft’s first test flight from the end of this year to June 2013. It still expects to deliver the first CSeries plane by the end of 2013. As well, slowing demand for its passenger railcars has prompted the company to cut 3% of this division’s workforce, including closing a plant in Germany. Severance and other costs will probably total $150 million (all amounts except share prices in U.S. dollars) in the fourth quarter of 2012. The company did not say how much these moves would save it. Meanwhile, Bombardier earned $209 million, or $0.12 a share, on sales of $4.3 billion in the three months ended September 30, 2012. The latest earnings beat the consensus estimate of $0.11 a share....

WESTJET AIRLINES $18.55 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1- 877-493-7853; www.westjet.com; Shares outstanding: 126.9 million; Market cap: $2.4 billion; Dividend yield: 1.7%) reports that its revenue rose 11.8% in the three months ended September 30, 2012, to $866.5 million from $775.3 million a year earlier.

Earnings jumped 79.9%, to $70.6 million from $39.3 million. That’s a new record for the second quarter. The higher revenue pushed up the company’s earnings.

WestJet aims to start up its new shorthaul Canadian regional airline, which it has now named WestJet Encore, by the end of 2013. Encore will serve smaller centres with Bombardier turboprop planes.

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