Canada will celebrate Remembrance Day today, which memorializes the end of the First World War. That destructive war emerged out of a multi-polar war wherein many great powers were vying for military and economic supremacy. The relative decline of American power since the end of the 20th century has brought about conditions that could draw comparisons to the pre-war period. Predictably, nations are moving to invest in defence around the world. Today, I want to look at three TSX stocks that are set to gain due to these investments.
This TSX stock has soared since its dip in late 2020
Heroux-Devtek (TSX: HRX) is a Quebec-based company that is engaged in the design, development, manufacture, assembly, and repair and overhaul of aircraft components. It also operates a robust defence segment. Shares of this TSX stock have climbed 34% in 2021 as of close on November 10. The stock is up 47% from the prior year.
The company is set to release its second-quarter fiscal 2022 results on Friday. In Q1 FY2022, Heroux-Devtek saw sales dip to $126 million compared to $128 million in the prior year. Meanwhile, it delivered defence sales growth of 21%. Adjusted EBITDA rose to $20.0 million or 15.9% of sales — up from $18.4 million or 14.3% of sales in the first quarter of fiscal 2021.
Shares of this TSX stock possess a price-to-earnings (P/E) ratio of 24. That puts Heroux-Devtek in favourable value territory relative to its industry peers.
Why CAE is worth buying after its earnings release
CAE (TSX: CAE)(NYSE:CAE) is a Montreal-based company that designs, manufactures, and supplies simulation equipment and training solutions to the aerospace and defence sectors. This TSX stock has increased 22% in the year-to-date period. Its shares are up 40% from the same time in 2020.
The company will release its second-quarter fiscal 2022 results this afternoon. In Q1 FY2022, CAE delivered revenue growth of 37% to $752 million. Meanwhile, it posted adjusted earnings per share of $0.19 over a loss of $0.11 in the first quarter of fiscal 2021. Defence and Security revenue rose 3% year over year to $288 million. Moreover, its defence backlog remains very promising at approximately $5.8 billion of bids and proposals pending customer decisions.
This TSX stock is trading in solid value territory compared to its pricier competitors. CAE will have its eyes on getting its dividend back on track if it can continue to build earnings momentum.
One more TSX stock to snatch up in a choppy geopolitical climate
Cyber space has grown into a competitive background among nation states. In May, I’d discussed why investors should prepare for the possibility of increased cyberattacks in the years ahead. Cyberattacks may seem quaint in comparison to conventional warfare, but proliferation in this area can lead to significant economic devastation as well as political and social upheaval. That is why the public and private sector is investing big in cybersecurity.
BlackBerry (TSX: BB)(NYSE: BB) remains one of the top TSX stocks to snatch up in this space. Shares of this TSX stock have climbed 55% in 2021. In the second quarter of fiscal 2022, BlackBerry reported cybersecurity revenue of $120 million with a gross margin of 59% and ARR of $364 million. On the business side, the company updated SecuSUITE capabilities to protect phone calls and messages for public and private entities from high-risk eavesdropping.
