bombardier

BOMBARDIER INC., Toronto symbols BBD.A $4.04 and BBD.B $3.91, rose 5% this week after the company received a firm order for 100 of its Challenger business jets from NetJets Inc., a private company owned by billionaire investor Warren Buffett. In addition to the implied endorsement by Mr. Buffett, this sale is worth $2.6 billion (all amounts except share prices in U.S. dollars), or 13% of Bombardier’s annual sales of $20 billion. The company will begin delivering these planes in 2014. NetJets also has an option to buy an additional 175 planes. If it exercises this option, the value of the entire order would rise to $7.3 billion. And if you include a related long-term contract to maintain these planes, the value of the entire agreement could reach $9.6 billion....

Tip of the week: There are a few good reasons to pay a little extra money for the right class of shares in the stocks you buy.

WESTJET AIRLINES $15.48 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 130.8 million; Market cap: $2.0 billion; Dividend yield: 1.6%) serves 76 destinations in North America and the Caribbean. Its fleet of 98 modern Boeing Next-Generation 737s are 30% more fuel efficient than older aircraft. WestJet is scheduled to receive 37 more 737s through 2018. In the three months ended March 31, 2012, West- Jet’s revenue rose 15.3%, to $781.5 million from $692.2 million a year earlier. Earnings jumped 41.6%, to $68.3 million from $48.2 million. That’s a new record for the first quarter. It also marks the company’s 28th consecutive quarter of profitability. The higher revenue was the main reasons for the gain. Earnings per share rose 47.1%, to $0.50 from $0.34, on fewer shares outstanding....

WESTJET AIRLINES $15.48 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 130.8 million; Market cap: $2.0 billion; Dividend yield: 1.6%) serves 76 destinations in North America and the Caribbean. Its fleet of 98 modern Boeing Next-Generation 737s are 30% more fuel efficient than older aircraft. WestJet is scheduled to receive 37 more 737s through 2018.

In the three months ended March 31, 2012, West- Jet’s revenue rose 15.3%, to $781.5 million from $692.2 million a year earlier.

Earnings jumped 41.6%, to $68.3 million from $48.2 million. That’s a new record for the first quarter. It also marks the company’s 28th consecutive quarter of profitability. The higher revenue was the main reasons for the gain. Earnings per share rose 47.1%, to $0.50 from $0.34, on fewer shares outstanding.

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CHESAPEAKE ENERGY CORP., $17.39, symbol CHK on New York, is down about 50% from its high of $35.75 last August. That’s largely because natural gas prices have fallen to near 10-year lows. However, the drop has accelerated lately, partly on news that the company’s co-founder, CEO and chairman, Aubrey K. McClendon, took out loans that could put him in a conflict of interest. The U.S. Securities and Exchange Commission (SEC) is now investigating....

THE WESTAIM CORP., $0.73, Toronto symbol WED, owns Jevco Insurance Co., which sells insurance to high-risk drivers, as well as owners of motorcycles, snowmobiles and recreational vehicles. Jevco operates in Ontario, Quebec and Alberta. Westaim bought Jevco for $264.2 million in March 2010. Westaim jumped 9% this week after it agreed to sell Jevco to Intact Financial Corp. (Toronto symbol IFC); Intact is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing. Westaim will receive $530 million when the sale closes in the fall of 2012. That’s equal to 1.3 times its market cap of $423.7 million....

Many leading U.S. and Canadian multinational companies stand to gain from rising consumer and business demand in foreign markets. These global companies also cut risk for investors. We generally advise against investing directly in foreign markets, especially emerging markets. These markets are highly volatile, and growth can be swift. But investors enjoy far less legal protection than they do in more developed countries. However, high-quality U.S. and Canadian companies with profitable international interests can be good additions to almost any portfolio. Canadian stocks with substantial foreign operations (especially outside the U.S.) include the following:...

BOMBARDIER INC. (Toronto symbols BBD.A $4.04 and BBD.B $3.93; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.9 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.5%; TSINetwork Rating: Average; www.bombardier.com) has won a contract to build 300 subway cars for the New York City public transit system. The company will begin delivering these trains in 2016.

The $600-million deal is small next to Bombardier’s annual revenue of $18.3 billion (all amounts except share price and market cap in U.S. dollars). However, orders like this will help Bombardier win more contracts from other major cities.

Bombardier is a buy. The cheaper class B shares are the better choice.

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BOMBARDIER INC. (Toronto symbols BBD.A $4.04 and BBD.B $3.93; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $6.9 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.5%; TSINetwork Rating: Average; www.bombardier.com) has won a contract to build 300 subway cars for the New York City public transit system. The company will begin delivering these trains in 2016. The $600-million deal is small next to Bombardier’s annual revenue of $18.3 billion (all amounts except share price and market cap in U.S. dollars). However, orders like this will help Bombardier win more contracts from other major cities. Bombardier is a buy. The cheaper class B shares are the better choice.

BOMBARDIER INC. (Toronto symbols BBD.A $4.13 and BBD.B $4.08; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $7.0 billion; Price-to-sales ratio: 0.3; Dividend yield: 2.4%; TSINetwork Rating: Average; www.bombardier.com) earned $837 million, or $0.47 a share, in the year ended December 31, 2011 (all amounts except share price and market cap in U.S. dollars). It earned $762 million, or $0.42 a share, in the 12 months ended January 31, 2011 (the company has changed its fiscal year end to December 31). Revenue was $18.3 billion compared with $17.9 billion.

Sales of passenger railcars supplies 53% of Bombardier’s total revenue. This business has a backlog of $31.9 billion. The company gets the remaining 47% of its revenue from its aerospace division. This division has an order backlog of $22.0 billion.

Bombardier is a buy. The subordinate-voting class B shares are the better choice, due to their greater liquidity and slightly higher dividend yield.

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