Are you invested in Bombardier (TSX: BBD.B)? The aircraft manufacturer is one of the handful of options that perform better this year than the market. But can Bombardier shares continue to beat the market?
Let’s try to answer that question.
Meet (the new) Bombardier
Bombardier (TSX: BBD.B) is a share that experienced investors are well aware of. In fact, many still have the scars of the development of the company of the CS series plane, which the company almost has bankrupt.
This led to a painful, multi -year transition for the aircraft maker, in which debts were paid off, cropping full segments from his portfolio and concentrated on the core niche.
Fortunately, today’s Bombardier is a completely different company. First and foremost, the company is now a pure-play business jet operator, which has left other markets.
That focus, and by expansion, has helped a whole series of excellent product releases to beat the Bombardier -stock the market.
And it comes down to a few important reasons
Why Bombardier -shares beat the market
Let’s talk about those excellent product releases first. The worldwide jets of the company, in particular the Global 7500 and 8000, remains one of the best and most sought after ultra-long Range Jets on the market.
The 7500 was certified in 2018 with a whole series of records and improvements compared to the Business Jet market. The 8000, which will be employed next year, will push the needle even further. Unbelievable, those performance includes no less than 14,800 km range and a top speed of Mach 0.94.
In other words, the Global 8000 will be the fastest civilian plane, because the Concorde stopped flying two decades ago.
That translates into a huge opportunity for investors.
The second reason why Bombardier shares beat the market is the MRO (maintenance, repair and overhaul) services of the company. This also includes selling parts for his aircraft fleet.
The segment is very profitable and the increase in demand and, by extension, the sale of its planes led to an increase in this predictable but lucrative income flow.
Finally, the debt reduction has been mentioned above. If we look back on a few years when the company struggled in 2019, Bombardier had a debt of more than $ 12 billion, with a market capitalization of only $ 4.6 billion.
Nowadays those figures are very different. From the moment of writing, the market capitalization of Bombardier is located north of $ 16 billion, and it owes a more manageable $ 7 billion.
In other words, the company has improved enormously and Bombardier shares can continue to beat the market.
Will Bombardier shares continue to beat the market?
No stock is without risk. Seasoned investors know that the problems of Bombardier can pop up. That said, Bombardier offers a more streamlined and profitable things than in the past.
In my opinion, a small position in Bombardier remains a great option for long -term investors looking for growth in a larger, well -diversified portfolio.
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