The Motley Fool

Bombardier’s 20-year Outlook

Iain Butler | June 17, 2013| More on:

Chalk this up to something this Fool has never seen before.  Last week, Bombardier’s (TSX:BBD.B) Aerospace division released its annually updated, 20-year forecast for the business and commercial aircraft market.  It’s not the forecast part that has me amazed, it’s the time-frame.  20 years!  I get why companies perform such forecasting internally, but why make it public?

No one can possibly predict demand with any degree of statistical significance over a 20-year period – for anything.  And any analyst that contains even one fibre of skepticism is not going to do anything with these numbers.  Why bother?

Well, we’re writing about it.  And it’s not just us.  RBC’s note to clients for instance flashed “20-Yr Forecast Predicts Continued Aero Upcycle”.

From BBD’s perspective, this is a great way to garner a bit of totally unaccountable, “feel-good” press around its long-term business prospects.

This year’s forecast is essentially identical to last year’s and like RBC states, predicts steady demand over the next 20 years with emerging markets grabbing an increasing share of the market over this period.

Perfect.  Buy BBD’s stock, hold for next 20-years, and prosper.  Right?

Foolish Takeaway

This is a perfect example of what is known as “noise” in the marketplace.  This release should be completely ignored by investors, especially when we’re talking about a company like Bombardier.  Even if their forecast turns out to be bang on, you can bet it’s not going to be a straight line for this company from here to there.  The industry is far too economically sensitive.

However, investing in a company over a 20-year period can be highly lucrative – if you pick the right company.  The Fool’s special FREE report “3 U.S. Companies That Every Canadian Should Own” profiles 3 that fit the bill.  To download this report at no charge, simply click here now.

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Fool contributor Iain Butler does not own shares in any of the companies mentioned in this report at this time.  The Motley Fool has no positions in the stocks mentioned above.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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