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Can Any Stock on the TSX Index Match the Unbearable Lightness of Boeing (NYSE:BA)?


Anyone interested in making money trading stocks has doubtless seen a certain American stock soaring overhead this weekend. But can the TSX index defend Canadian airspace with a solid way to invest in the stock market’s aviation sector? Read on to see which of these two mega-stocks to buy now and whether buying aerospace shares on the TSX index makes the most sense.

Boeing (NYSE:BA)

Gaining sudden altitude with a rise of 7.63% in the last five days, Boeing is an American super-stock without equal. Its five-year beta of 1.23 relative to the NYSE indicates middling volatility, and it’s apparently got more upside than folk had been giving it credit for. Indeed, with a P/E of 21.4 times earnings and P/B of 649.1 times book, you can see a stock that’s supercharged in the fundamentals department.

Moving on to other high-altitude stats, its past-year ROE is outstanding to say the least, but unfortunately it has to be balanced with a no-less outstanding (though in a different way) comparative debt level that the risk averse may find off-putting. A dividend yield of 2.13% is on offer, tempered with a 9.7% expected annual growth in earnings, and its share price is discounted by 13% compared to its future cash flow value.

Bombardier (TSX:BBD.B)

This is that moment when we look to the TSX index for a chance to shine. But can Bombardier really compete? A one-year past earnings growth of 95.9% beat the industry’s year-on-year average earnings growth of 16.5% as well as its own five-year average past earnings growth of -5.4%.

However, this is where the stats start to fall apart: Negative shareholder equity makes this stock something of a risk, and with a raft of negative fundamentals and no dividends on offer, the question remains as to why anybody would want to buy. Indeed, it seems a fairly low-quality stock in terms of ROE and EPS, with only a 46.4% expected annual growth in earnings to show that this stock is worth the investment.

While that expected earnings percentage should interest growth investors, it’s up to a few momentum stats to pull it out of the bag: having gained 3.11% in the last five days, its beta of 1.53 indicates higher-than-market volatility, and its share price is discounted by 47% compared to its future cash flow value. High growth is therefore Bombardier’s best asset here, along with an inability of comparison with some of Boeing’s more alarming stats.

The bottom line

For the risk-averse investor, comparing a stock whose liabilities exceed its assets (Bombardier) with one that carries debt several thousand times its net worth (Boeing) is like choosing between a bowl of salt and a bowl of vinegar for dinner — both are unappealing, ill-advised, and won’t do you much good.

However, Boeing may have more momentum than Bombardier; the latter stock never recovered from last July’s price crash, whereas the former stock has been on a tear since the start of the year and has generally upward mobility. In the end, both stocks have their perks, and it essentially comes down to a choice between investing in the TSX index or the NYSE.

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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

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