The Motley Fool

Could Bombardier, Inc. (TSX:BBD.B) Stock Double in 2019?

Bombardier (TSX:BBD) had a volatile 2018, and investors are wondering if the sell-off in the last quarter of the year might offer a good entry point as the company begins 2019.

Let’s take a look at the current situation to see if Bombardier deserves to be on your buy list right now.


Bombardier has certainly had its issues in recent years.

Much of the pain is connected to the former CSeries jet program, where delays and cost overruns led to a change in management and suspension of the dividend. Tariff threats from the U.S. government resulted in the eventual transfer of control of the business to Airbus. The planes, now called A220, are a part of the Airbus product offering.

The huge surge in orders that investors expected after Airbus took control last July hasn’t occurred, but deals are starting to emerge. Airbus just confirmed it will build 120 A220 planes at its new plant in Alabama to complete orders from JetBlue and a start-up, Moxy.

If Airbus can get airlines around the world to sign up and pay a reasonable price for the A220 jets in 2019, Bombardier should benefit.

Bombardier’s private jet program is also a potential catalyst for the stock. The company’s Global 7500 business jets are already sold out through 2021, and as long as the global economy holds up and wealthy individuals keep jet-setting around the planet, the division should deliver solid revenue and profits. The company expects to deliver more than 150 business aircraft in 2019.


Bombardier Transport has also had its fair share of difficulties. The group has struggled with manufacturing issues and delivery delays for light rail transit orders. The company’s public battle with the Toronto Transit Commission is of particular note.

As a result, the company might have lost out on some key deals, both in the United States and Canada. Boston and Chicago both chose a Chinese company over Bombardier for their most recent contracts. In 2018, Montreal decided to go with Alstom, and Via Rail gave its contract for new trains to Siemens.

Bombardier says it has fixed the problems that have hindered the train group, and its recent win for a light rail contract with New Jersey suggests better days could be on the way.


Bombardier is carrying US$9.5 billion in long-term debt, and the notes start coming due in 2020. That means Bombardier will have to begin refinancing the debt this year. If it has to pay a much higher yield to replace the debt that is coming due, the stock could come under pressure.

Bombardier continues to burn through cash. It will have to meet its target of switching to positive cash flow in the next couple of years to avoid another potential cash flow crisis.

Should you buy?

Bombardier currently trades for $2.20 per share. It hit a high of $5.40 in 2018, so there is certainly an opportunity for the stock to deliver 100% upside in 2019.

For that to happen, the company would need to see additional Airbus orders that would be manufactured in Canada as well as new rail contracts. The company says it is on track to meet its turnaround objectives. If it can convince the market, once again, that this is truly the case, investors could see some nice returns.

At this point, I would keep the position small. The next couple of quarterly reports will have to show progress on the cash flow situation. If another negative surprise comes out, as it did in Q3 2018, the stock could take another hit.

Other opportunities might be better picks right now.

Our #1 Stock to Buy in 2019 (and Beyond!)

When you buy heavily cyclical stocks at low prices… and then hold the shares until the cycle reaches its peak… you can make a very healthy profit.

Every investor knows that. But many struggle to identify the best opportunities.

Except The Motley Fool may have a plan to solve that problem! Our in-house analyst team has poured thousands of hours into their proprietary research – and this is the result.

Our top advisor Iain Butler has just identified his #1 stock to buy in 2019 (and beyond).

The last time this stock went from the low point of its cycle to the peak… shares shot from $12 to $40 inside of 4 years. That’s an 300%-plus return. And if you missed out on that ride, today might just be your second chance.

Click here to claim Iain’s new report, absolutely FREE!

Fool contributor Andrew Walker has no position in any stock mentioned.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.