Better Buy: Bombardier Stock or Air Canada Stock?

While these airline stocks may be on the recovery, could one possibly be worth more than the other — especially for long-term holders?

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The airline industry continues to recover, even if it’s only a baby step at a time. Yet two of the companies that investors continue to watch are Bombardier (TSX:BBD.B) and Air Canada (TSX:AC).

It’s clear why. The two have been on a rollercoaster of stock price movement over the past few years. And with the pandemic restrictions now pretty much behind us, it’s time to ask: which is the better buy?

The case for Air Canada

Air Canada stock was the darling of the TSX a few years back. Before the pandemic, shares hit $50! And yet as of writing, those shares have dropped in half and then some. Even still, many may question whether Air Canada stock can recover to those days of glory.

If you’re a long-term investor, which is usually the way to go, then now is a great time to buy. The company is down but certainly not out, as it is one of the largest airlines in the country. While it’s true that it has a lot to contend with in terms of business and long-haul travel, post-pandemic lessening of restrictions will allow it to make up some of these decreases in the long term.

Plus, the company continues to state that it’s been returning to 2019 levels when it comes to booking. Granted, we are entering a recession, and this will be hard to contend with in the next year. But by the time the next bull market comes, and it will come, Air Canada stock could indeed see shares double from current levels.

The case for Bombardier stock

Bombardier stock made an interesting move last year when it decided to merge its shares in a reverse stock split. Since then, it’s been doing quite well, proving that the move of focusing solely on its business jet sector was the way to go.

In fact, the company continues to be the world’s largest business jet manufacturer as of 2022. Bombardier stock was quite bullish, even about 2023, with the company increasing its outlook, which led to a slew of analyst upgrades.

While Bombardier stock may be down, some predict it won’t be for long. Shares are already up a whopping 71% in the last year alone, though they’re still down 31% in the last decade, with the stock split taken into consideration.

Which is the better buy?

In the next year, Bombardier stock should continue to outperform, according to analysts. It has a “solid backlog” that should allow the manufacturer to achieve its 2025 targets and then some. Further, analysts believe it’s on the path to a $90 share price for the longer term.

As for Air Canada stock, analysts remain bullish over the company as well. Even as it fell short of expectations during its earnings report. The company has rebounded from the pandemic, allowing costs to “stabilize” in 2023. Therefore, after 2023, this company could rebound significantly, with the current share price not reflecting that future growth.

If you’re looking for a deal, I would go with Air Canada stock today in terms of future long-term growth. However, Bombardier stock is still a good buy, but only if you plan on holding long term, and you may want to wait for a dip in share price first.

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 Amy Legate-Wolfe has positions in Bombardier. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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