Moving over to the business jet segment, Bombardier has three brands that include Learjet, Challenger and Global. The Global 8000, which is expected to enter service in 2017, will fly farther than any other business jet. Its expected range is 7,900 nautical miles, allowing executives to fly nonstop from New York to Hong Kong and perform other long-haul flights.
Bombardier has had its ups and downs in recent years. However, if you listen to CIBC World Markets analyst Michael Willemse, its current share price of $4.08 as of April 4 is a tad pessimistic. Willemse reasons that if you value the subway cars and business jets at $5.30 a share, the market is valuing the commercial aircraft segment at -$2 billion or -$1.15 a share. He pegs the value of the commercial jets at $1.20 a share, 200% higher than currently valued. Given that Bombardier’s peers are trading at much higher multiples, I’d say the downside already has been baked into the price of its stock. Bombardier’s ready for take-off.
The thinly traded Shaw Communications (NYSE:SJR) is a smaller, Canadian version of Comcast (NASDAQ:CMCSA). Its entertainment and communications businesses run the gamut from video distribution to cable to broadcast television and everything in between.
Unknown by most investors outside of Canada, it generated revenues of $4.7 billion in fiscal 2011 and EBITDA of more than $2 billion. That’s an EBITDA margin of 43%, approximately 9 percentage points higher than its much larger peer. Income-focused investors should note its current dividend yield is 4.6%, more than double Comcast’s and 60 basis points higher than Canadian rival Rogers Communications (NYSE:RCI).
As a business, I think it holds its own against any of its Canadian counterparts. However, where it fails badly is in its corporate governance. Founded by Alberta’s Shaw family, it’s paid out a king’s ransom in recent years to various members of the family in the form of excessive executive compensation. Supporters of the company will point to its stock’s appreciation as evidence it was money well spent. In my books, excessive executive compensation is just plain wrong. For that reason alone, I’d take a closer look before investing.
Canadian stocks have had a good run the last decade, seriously outperforming their American counterparts. However, over the past year, it has become obvious Canadian stocks are in a bit of a stall. Therefore, rather than putting your money in a broad-based ETF, you’ll want to consider Canadian stocks on a case-by-case basis. The three above give you a good place to start.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.