The 2024 TSX30 List came out recently, and Canadians with investment appetites have sound prospects heading into the last quarter. This year's winners contributed to the country's economic prosperity. Energy, industrial, and mining sectors have strong representations (25 of 30 stocks), and some are repeat winners from 2023.
Bombardier (TSX:BBD.B) could be the best buy now, given its steady performance and healthy returns in back-to-back years. The growth stock placed 13th in the annual ranking, the same as last year. Its 200% three-year dividend-adjusted share price performance indicates a profitable company.
As of this writing, the share price is $95.54. The year-to-date gain is 79.55%, while the trailing one-year price return is 94.90%. Market analysts covering the stock recommend a "buy" to a "strong buy" rating. Their 12-month average and high price targets are $112.41 and $143.16, or an upside potential between 17.66% and 49.84%.
Business aviation industry
Bombardier made the right decision to restructure and become a pure-play business jet maker. The $9.44 billion company designs and builds aircraft for people, businesses, and governments. Its higher-margin aftermarket services account for more than 22% of total revenues.
The increasing number of aircraft deliveries since 2020 is proof of Bombardier's financial turnaround. From 114, it met delivery guidance every year in 2021 (120), 2022 (123), and 2023 (138). According to management, customer services will continue to grow significantly at higher margins. The defence market is the next growth driver, owing to the robust demand outlook and addressable market.
Latest quarterly results
In the second quarter (Q2) of 2024 (three months ending June 30, 2024), revenues climbed 32% year over year to US$2.2 billion, while net income reached US$19 million compared to the $54 million net loss in Q2 2023. Éric Martel, Bombardier's president and chief executive officer, said the entire team performed at an extremely high level during the quarter.
"As the company enters the fourth year of our journey centred on business aviation, our being able to post double-digit growth year-over-year underscores our focused business model, the strength of our plan and the team's unwavering ability to execute," Martel added.
Total aircraft deliveries increased 34% to 39 units from a year ago. Bombardier sees a clear path to 150 to 155 aircraft full-year guidance, a projected 8.7% to 12.3% growth from 2023. The Services business remains solid, especially with a fully operational and expanded network.
Martel notes the strong global market for business aviation, and Bombardier is well-positioned to meet demand, including the defence and medevac solutions markets. The backlog at the quarter's end was US$14.9 billion.
Growth targets
Bombardier is forward-looking and has set growth objectives from 2025 to 2030. Next year's revenue target is US$9.4 billion, with the breakdown as follows: Aircraft manufacturing and others: 65%; aftermarket: 22%; and defence and pre-owned market: 13%.
Management believes Bombardier has five growth levers through 2030, beginning with an industry-leading portfolio and continued aftermarket expansion. The next are the Defense growth market, pre-owned market capture, and mergers & acquisitions or partnership opportunities.
By 2030, the revenue contribution of aircraft manufacturing and the rest (aftermarket, defence, pre-owned) will be 50/50. Bombardier is the top-of-mind choice for growth investors. The less than $100 share price is a good entry point.
