It’s that time of the year again, when hundreds of companies in the aerospace sector make their way to Paris for the 51st annual Paris Air Show. This event started on the 15th and will continue until the 21st. This event can be a make-or-break scenario because there are buyers there with big pocket books.
Bombardier Inc. (TSX:BBD.B) needs this week to go flawlessly. It has finally figured out its CSeries, which should finally be certified by the end of 2015. But now the time has come for Bombardier to really show customers that its plane is worth their money.
And it needs to. Bombardier had a target goal of 300 orders for the CSeries. As of this writing, it only has 243. Now, that’s not terrible considering Bombardier is at this giant airshow, but the company needs to show investors that it can secure enough customers to justify all the money it put into this plane.
How this week plays out
If you’re looking to trade on the results of the Paris Air Show, there are really two outcomes. The first is that the company does well. If the news out of Paris has something to do with an airline committing to buy a significant number of planes, this stock is going to pop. I would not be surprised if we see a 10-20% pop on that news.
However, if Airbus or Boeing announce that they have signed any large clients, investors might take that as news that Bombardier is failing. In that event, the stock price could drop even more than it already has.
The moral with this company is that, short term, you either want to trade the stock or avoid it. While I think Bombardier is going to do all right in Paris, it is running up against some serious competition with some really efficient airplanes.
What about long term?
If you’re not a trader but you want to own Bombardier, wait until the week is over. Don’t even open your brokerage account. If Bombardier makes any good deals and it can get the airplanes off the assembly line, the company should be in a decent position going forward.
But while I believe that Bombardier can be a long-term hold for investors, this week is going to have a lot of news coming out that will send the stock up or down quite a bit.
Therefore, wait until next week to consider initiating a position in Bombardier. And when you do, don’t make it a large one. Start small, and as the stock rises, you can add more shares. This is a turnaround stock. If you put too much money in, it can quickly turn into a portfolio-busting stock.
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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 Jacob Donnelly has no position in any stocks mentioned.