The Motley Fool

Will Russian Sanctions Sink the Shares of Kinross Gold Corporation or Bombardier Inc.?

Despite a cease-fire announced on September 5, the crisis in Ukraine is not going anywhere. Vladimir Putin is certainly not backing down, and the current situation is unacceptable to the European Union and United States.

But of all the Western leaders, Canadian Prime Minister Stephen Harper seems to be taking the harshest stance against Russia. This shouldn’t be surprising — Canada has over 1 million ethnic Ukrainians, and Mr. Harper has taken pro-Ukrainian stances before. This should be very worrying for any Canadian company that does significant business in Russia. Two stand out in particular: Kinross Gold Corporation (TSX: K)(NYSE: KGC) and Bombardier Inc. (TSX: BBD.B).

Unsurprisingly, both stocks have struggled so far this year, each down about 20%. So what should investors do? Below we take a look.

Should investors mint their Kinross Gold shares?

Kinross just can’t seem to catch a break. The company has had to deal with a disastrous acquisition in Africa, a failed project in South America, falling gold prices around the world, and now Russian sanctions.

Russia has accounted for nearly 30% of Kinross’s gold production so far this year, which really puts the company in a bind. Earlier this year, it attended the St. Petersburg International Economic Forum, against the wishes of Mr. Harper.

This should be very worrying for Kinross shareholders, because Kinross is walking on a tightrope. And in the future, either Mr. Harper or Mr. Putin could become enemies of the company and impose stiff restrictions on its operations in Russia.

So at this point, the company isn’t worth adding to your portfolio. The risk is too great.

Bombardier is also facing headwinds in Russia

Like Kinross, Bombardier has been dealing with a whole host of problems, not just in Russia. More specifically, setbacks in the CSeries program have done a lot of damage to cash flow, the balance sheet, and the stock price.

Luckily for the company, it is not as reliant on Russia as Kinross is. Last year, Russia accounted for $240 million in revenue, about 1.3% of the company’s total. However, Russia’s share of revenue was set to grow significantly; Bombardier had plans to build a Q400 turboprop factory in the country. But those will likely be scrapped. For the time being, the company is “monitoring the situation closely”.

Then again, Bombardier is probably better off abandoning those plans anyway. It has enough problems to deal with, and management’s focus is likely best served dealing with the CSeries.

So at this point, you shouldn’t avoid Bombardier just because of concerns about Russia. But there are plenty of other reasons to avoid the stock. Your best bet is to look elsewhere — the free report below has some good alternatives.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.