cae

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....

CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.7 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) is the world’s leading maker of flight simulators for commercial airlines, with 70% of the market. It also makes simulators for military clients. The company began training pilots for its customers in 2001; it now has over 100 flight schools in 30 countries.

CAE gets 50% of its revenue from military clients. That cuts its exposure to cyclical commercial airlines, which supply 45% of its revenue.

New markets have big potential

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CAE INC. (Toronto symbol CAE; www.cae.com) is the world’s leading maker of flight simulators for commercial airlines, with 70% of the market. It also makes simulators for military clients. The company began training pilots for its customers in 2001; it now has over 100 flight schools in 30 countries. CAE gets 50% of its revenue from military clients. That cuts its exposure to cyclical commercial airlines, which supply 45% of its revenue....

CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.7 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) is the world’s leading maker of flight simulators for commercial airlines, with 70% of the market. It also makes simulators for military clients. The company began training pilots for its customers in 2001; it now has over 100 flight schools in 30 countries. CAE gets 50% of its revenue from military clients. That cuts its exposure to cyclical commercial airlines, which supply 45% of its revenue.

New markets have big potential

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CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.7 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) recently sold six flight simulators and related equipment....

BCE INC., $42.86, Toronto symbol BCE, has failed to win regulatory approval for its $3.4-billion deal to buy Astral Media Inc. (Toronto symbols ACM.A and ACM.B). Montreal-based Astral owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as the Movie Network, Family Channel and Teletoon. It also owns billboards and sells other outdoor advertising in Quebec, Ontario and B.C. Regulators felt the purchase would give BCE an overwhelming share of the TV broadcast market, which would hurt competition....

CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.7 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.cae.com) recently sold six flight simulators and related equipment. In all, these deals are worth $85 million, or 5% of CAE’s annual revenue of $1.8 billion. The company has now sold 16 simulators in its 2013 fiscal year, which began on April 1, 2012. CAE sold 37 simulators in all of fiscal 2012. CAE is a buy. IGM FINANCIAL INC. $37 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares out- standing: 255.1 million; Market cap: $9.4 billion; Price-to-sales ratio: 3.6; Dividend yield: 5.8%; TSINetwork Rating: Above Average; www.igmfinancial.com) reports that it had $119.7 billion of assets under management, including mutual fund assets, as of September 30, 2012. That’s an increase of 2.5% from $116.7 billion a year earlier....

CAE INC. $10 (www.cae.com) has won contracts to build flight simulators and upgrade other pilot training equipment for military clients in the U.K., India and Oman. In all, these deals are worth $55 million. That’s equal to 3% of CAE’s annual revenue of $1.9 billion. Best Buy.

CANADIAN IMPERIAL BANK OF COMMERCE $77 (www.cibc.com) earned $2.06 a share in the three months ended July 31, 2012. That’s up 6.7% from $1.93 a year earlier. Loan demand remained strong in Canada, and profits rose at the bank’s wealth management and capital markets divisions. The strong results prompted CIBC to raise its quarterly dividend by 4.4%, to $0.94 a share from $0.90. The new annual rate of $3.76 a share yields 4.9%. Buy. CAE INC. $10 (www.cae.com) has won contracts to build flight simulators and upgrade other pilot training equipment for military clients in the U.K., India and Oman. In all, these deals are worth $55 million. That’s equal to 3% of CAE’s annual revenue of $1.9 billion. Best Buy. CANADA BREAD CO. LTD. $44 (www.canadabread.ca) reported that its sales fell 0.3% in the three months ended June 30, 2012, to $404.9 million from $406.2 million a year earlier. That’s mainly because it closed an older bakery in Toronto as part of a restructuring plan. Earnings per share rose 12.4%, to $1.09 from $0.97. However, Maple Leaf Foods continues to hold 90.0% of Canada Bread’s shares. That hurts the stock’s liquidity. Hold.

CAE INC. $10 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 258.3 million; Market cap: $2.6 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.6%; TSINetwork Rating: Average; www.cae.com) spends around 10% of its annual revenue of $1.8 billion on research. That helps it develop simulators for new planes, like the Boeing 787 Dreamliner and Airbus A380. The company is also using these funds to apply its expertise to new fields.

For example, CAE is now making simulators and other products, including lifelike mannequins, to train paramedics and medical students. It is also focusing on the mining industry: Right now, mining firms are using software that CAE developed to plan new mines and measure reserves. These new businesses, which both have strong growth potential, now supply 5% of CAE’s revenue.

The stock trades at 12.7 times the $0.79 a share that CAE will probably earn in its 2013 fiscal year, which ends March 31, 2013. The $0.16 dividend yields 1.6%.

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