Bombardier Stock: How High Could it Go in 2023?

Can Bombardier stock continue to soar in 2023 after rallying 336% in the last couple of years? Let’s find out.

| More on:
Aircraft wing plane

Image source: Getty Images

Bombardier (TSX:BBD.B) wasn’t among the 10 top-performing TSX Composite components last year, but it still managed to impress investors by delivering solid returns for the second consecutive year. The shares of the Canadian business jet maker jumped by 24.5% in 2022 after yielding an outstanding 250% return in the previous year.

By comparison, the TSX Composite benchmark slipped by 8.7% last year due to macroeconomic uncertainties, including high inflation and consistently rising interest rates. Before we discuss where Bombardier stock could be headed in 2023, let’s take a closer look at some key factors that have fueled its stock price rally in the last couple of years.

Bombardier stock rally: Key factors

In recent years, Bombardier has made quite an improvement in its fundamentals thanks to its increased focus on business jet manufacturing. Notably, the Canadian company, which was also involved in manufacturing trains, commercial jets, et cetera, started working on a five-year turnaround in 2015.

Despite facing pandemic-related challenges in 2020, Bombardier remained focused on its strategic repositioning around business aviation by closing three big transactions during the year. These efforts apparently gave a new life to its business jet manufacturing segment and helped it regain investors’ confidence. These steps could be some of the key reasons why Bombardier’s share prices jumped by 555% from just $8.25 per share to $54 per share in four quarters ended in September 2021.

In the final quarter of 2021, stock investors started becoming worried about macroeconomic concerns, leading to a market-wide selloff, which continued for the next couple of quarters. This is one of the main reasons Bombardier stock started 2022 on a bearish note, losing nearly 54% of its value in the year’s first half.

Nonetheless, as the Canadian business jet manufacturer’s bottom line continued to beat Bay Street’s estimates in all first three quarters of 2022, its stock staged a rally in the year’s second half, helping its stock close the year with strong 24.5% gains at $52.27 per share.

How high could Bombardier stock go in 2023?

While the broader market roller coaster continues in 2023, as macroeconomic uncertainties aren’t over yet, Bombardier stock has started the year on a strong note. BBD.B stock has risen by 7.6% to $56.24 per share in the first three trading sessions of the year, taking its market capitalization to $5.5 billion.

In the first three quarters of 2022, Bombardier made 74 aircraft deliveries, which was lower than the 82 deliveries in the first three quarters of the previous year. However, the company remains confident in delivering more than 120 aircraft units in the full-year 2022, despite supply chain challenges, compared to its 120 units delivered in 2021 and 114 deliveries in 2020.

More importantly, its order backlog at the end of the September 2022 quarter rose to $15 billion from $12.2 billion at the end of 2021, showcasing strengthening demand for its aircraft. In November, during the earnings call, its management said that Bombardier would aim to increase its aircraft deliveries by 15 to 20% in 2023, which should help its financials improve significantly and its stock keep soaring.

Bottom line

Given the ongoing macroeconomic uncertainties, it’s nearly impossible for anyone to predict the short-term direction of Bombardier stock or how high it could go in 2023. But it definitely seems to be on track to become sustainably profitable with strong margins in the coming years. That’s why Bombardier stock could be worth buying in 2023 and holding for the long term.

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.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Stocks for Beginners

Businessmen teamwork brainstorming meeting.
Stocks for Beginners

Why 50% of My Portfolio Is in These 3 Stocks

Here's why up to 50% of my portfolio is invested in stocks like The Toronto-Dominion Bank and two others.

Read more »

grow dividends
Stocks for Beginners

2 TSX Stocks Offering Deep Value Today

Air Canada and Spin Master are interesting value picks and potential outperformers in 2023.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Stocks for Beginners

These 2 Stocks Have Plenty of Room to Run

Growth stocks of great businesses have plenty of room to run. It's rare to find these stocks on sale. Currently,…

Read more »

Stocks for Beginners

4 Reliable Stocks to Buy and Hold for a Lifetime of Strong Returns

Do you want a passive way to invest? Be like Warren Buffett and just buy and hold these quality stocks…

Read more »

consider the options
Stocks for Beginners

What’s Ahead for Brookfield Asset Management Stock?

Brookfield Asset Management (TSX:BAM) stock is a good long-term core holding, especially now that it offers a decent dividend yield.

Read more »

Dice engraved with the words buy and sell
Stocks for Beginners

The TSX’s Biggest Losers in January 2023 (Should You Sell?)

While markets have trended up in 2023, the recent natural gas drop has made some energy stocks the TSX's biggest…

Read more »

eat food
Stocks for Beginners

Hungry? These 3 Food Stocks Are Hard to Ignore

Food stocks are some of the best long-term investments on the market. Here are three options that are hard to…

Read more »

A worker uses a laptop inside a restaurant.
Stocks for Beginners

Stubborn Interest Rates: 2 TSX Stocks That Can Play Along (and Even Win)

Higher interest rates are actually good for these stocks. They trade at good valuations and provide nice dividends.

Read more »