2 Defence Stocks to Consider for March 2023

Some of the best long-term stocks are those we often overlook. Fortunately, there’s no need to overlook these two defensive stocks this month.

| More on:
A airplane sits on a runway.

Source: Getty Images

How diversified is your portfolio? Few new investors may realize this, but there’s a treasure trove of defence stocks to consider buying right now. More importantly, those stocks are often overlooked by most investors.

Here’s a look at two candidates to consider adding as part of your larger, well-diversified portfolio.

Have you considered CAE?

It would be near-impossible to compile a list of defence stocks and not mention CAE (TSX:CAE). For those that are unaware, CAE is one of the largest defence contractors in Canada.

The company, which provides both training solutions and simulation equipment, is broadly segmented into three areas. Those segments include civil aviation, health care, and defence and security.

Demand for the products and services that CAE provides has grown in recent years. Prospective investors should note that there’s little reason to doubt that demand will slow anytime soon.

In fact, CAE is expected to deliver 45 full flight simulators during this fiscal year. This represents an impressive increase over the 40 previously reported.

As of the time of writing, CAE has surged nearly 20% year to date, far outperforming the market.

That potential extends well into CAE’s quarterly results as well. In the most recent quarter, CAE reported a profit of $78.1 million. This was a massive $26.2 million improvement over the same period last year.

This is not the Bombardier of the last decade

Bombardier (TSX:BBD.B) is a name that most investors should recognize. The plane manufacturer has emerged stronger a turbulent decade. During that period, Bombardier branched out into the commercial airliner space at considerable expense.

The company then proceeded to do a complete reversal and sell off most of its units. Apart from its commercial airline segment, Bombardier also offloaded its rail business and smaller turbo-prop business unit.

Today the company is smaller, leaner, and more focused. That focus is on the private jet market, where Bombardier is riding a massive tailwind (pun intended).

Specifically, the company has a massive US$14.8 billion order backlog, which is a welcome change for long-time followers of Bombardier. Bombardier churned out 123 jets in 2022.

Long-time followers might recall that deliveries were something Bombardier once struggled with. That impressive feat earned the company an accolade as the world’s busiest business jet manufacturer.

Those deliveries amounted to US$6 billion in revenue for the company. That bump was primarily attributed to its revamped Challenger and Global Express line of jets. The redesigned jets have received positive reviews from both crews and passengers.

The jets have also shattered several world records in speed and distance, setting a new benchmark for the segment. That impressive performance is expected to continue beyond 2023 now that markets have reopened.

In short, prospective investors looking for a defence stock with long-term potential should take a look at Bombardier.

Defence stocks to consider holding for long-term growth

All investments, even the most defensive, carry some risk. That’s why it’s important to diversify your portfolio with a collection of investments from a broad segment of the market.

That’s also why Bombardier and CAE are intriguing investments. In my opinion, one or both should form a small part of a larger, well-diversified portfolio.

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 Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Building a $50,000 Portfolio That Can Weather Any Market Storm

This defensive investment portfolio uses three ETFs to ride out any recession.

Read more »

Two seniors float in a pool.
Retirement

Want to Retire Rich? 3 TSX Stocks to Add to Your Portfolio Now

These TSX stocks could deliver above-average returns in the long run, helping you build wealth over time and retire rich.

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Top 3 TSX30 Winners: Understanding the Recent Stock Drop

Three TSX30 winners in 2024 have experienced price drops this year and continues to underperform due to massive headwinds.

Read more »

space ship model takes off
Dividend Stocks

Where to Put $12,000 in Today’s Market for Potential Long-Term Gains

There's no shortage of great investments that can provide potential long-term gains. Here's a look at three stellar options.

Read more »

Hand Protecting Senior Couple
Retirement

Avoid the OAS Clawback: Dividend Strategies Every Retiree Should Know

With a smart dividend strategy, the OAS clawback can be minimized or even avoided entirely for retirees. Here's how.

Read more »

Canadian dollars are printed
Dividend Stocks

How to Use $10,000 to Transform a TFSA Into a Cash Machine

Do you want growth and income? Consider these top investments that offer up monthly income in spades!

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Building a $28,000 TFSA Portfolio One Contribution at a Time

Let’s take a look at how you can turn a $28,000 investment in a TFSA into a life-changing fund for…

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

Making Your $25,000 TFSA Investment Work Harder for the Long Term

This strategy reduces risk while still providing a solid return.

Read more »