If You’d Invested $2,500 in Bombardier Stock in 2020, Here’s How Much You’d Have Today

If you’d invested $2,500 at the start of Bombardier’s turnaround story and stuck with the stock through its turbulence, you earned a big fat return.

| More on:

Bombardier (TSX:BBD.B) stock has made its pandemic investors happy in the last three years, as the plane and train maker underwent Jedi training to become a Master. The company rose from a multi-year loss and a US$10 billion debt to a profit-making company with manageable debt and positive free cash flow. This remarkable turnaround was the brain of Éric Martel, who took to the helm in the spring of 2020. He started his new role with two main objectives, reduce debt, and focus on Bombardier’s profitable ventures. 

If you’d invested $2,500 in Bombardier in 2020…

Those who invested in Bombardier during the pandemic (March 2020) are now sitting on good returns. If you had invested $2,500 in this stock when it traded below $1, you would have got more than 2,500 shares of Bombardier. That was a tough time, as the pandemic changed the world for airlines and made matters worse for plane makers. 

Bombardier’s departing chief executive officer Alain Bellemare left with a generous $17.5 million severance pay while the company reported US$1.6 billion in losses. If you look at Bombardier’s history, it is a strong company that makes good planes. Its fate turned, as it got caught in the highly competitive U.S. market dominated by Boeing and Airbus.

Fun fact: Airbus A220 was formerly Bombardier CSeries aircraft, which Airbus acquired in an all-share deal. 

2020: Survive then thrive 

The pandemic was all about survival. With all planes grounded, they became a liability to the airlines. Many airlines retired their old planes. Bombardier used all the support it could get from the government to survive. It also used the record low interest rate of the pandemic to restructure debt. 

2021: Time to offload 

As pandemic skies showed a silver lining with the vaccine in place, Bombardier executed the strategic sale of its train-making business to Alstom and used most of the proceeds to repay the next three years of debt maturity. Martel sold many small business segments and made Bombardier a pure-play business jet maker. From here began its growth journey. Bombardier stock surged 253% between February and September 2021. 

2022: Bombardier’s V-shaped recovery 

But the last quarter of 2021 brought a steep market correction as hedge funds started to sell stocks over fears of accelerated interest rate hikes in 2022. Bombardier stock lost a 50% valuation by June 2022, and the stock once again struggled to stay above $1. The business jet maker didn’t want to be removed from the TSX Composite Index again (it was removed from Index in June 2020), as it would weaken institutional investor investment. 

Fun fact: For stocks to remain listed on the TSX Composite Index, they should have a market capitalization of at least 0.04% of the index and sustain a share price of over $1. 

Bombardier announced a 25:1 stock split and secured its position on the exchange. So if you own 2,500 shares, you will now own 100 shares of Bombardier. After the consolidation, the stock dipped and then recovered. This recovery was backed by fundamentals, as the company’s June 2022-quarter earnings surprised investors. Bombardier achieved its 2025 free cash flow (FCF) target of over US$500 million. 

Bombardier’s growth story: 2023 and beyond

Bombardier still has a lot of fuel left to complete its turnaround journey. The next phase of the story is growth in profits. After growing revenue by 23% to US$6.9 billion between 2020 and 2022, Bombardier increased its 2025 revenue outlook to US$9 billion (from the previous US$7.5 billion). 

The company expects revenue to be driven by strong demand for its Challenger 3500 jet and defence business. It expects to boost profits by focusing on aftermarket services and accelerating debt repayment. 

What should you do? 

Had you invested $2,500 in this stock in April 2020, you would have increased your money fivefold to $13,400 today. If you own the stock, hold it until 2025, as it continues on its turnaround path. And if you don’t, you can buy the stock at its current price of over $57. While your money may not grow 10-fold, it could double by 2025 and beyond. 

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Alstom. The Motley Fool has a disclosure policy.

More on Investing

A plant grows from coins.
Dividend Stocks

3 Dividend-Growth Champions That Could Keep Raising Payouts in Any Market

These three Canadian stocks with consistent dividend growth are excellent buys to boost your passive income and strengthen your portfolios.

Read more »

ways to boost income
Dividend Stocks

TFSA to $100K: 2 Dividend-Growth Stocks to Power a Tax-Free Fortune

Building a tax-free fortune through the TFSA is possible with two top-tier dividend-growth stocks.

Read more »

dividends can compound over time
Dividend Stocks

1 Magnificent Canadian Dividend Stock Down 21% to Buy and Hold for Decades

Down 21% from all-time highs, TD Bank is TSX dividend stock that offers a tasty dividend yield of 5.1% in…

Read more »

senior man smiles next to a light-filled window
Dividend Stocks

Canadians: 3 Big Changes Coming to CPP and OAS in 2025

If you don't expect to get enough CPP and OAS to retire, you can invest in ETFs like iShares S&P/TSX…

Read more »

Two seniors float in a pool.
Retirement

3 TSX Stocks That Can Turn Retirement Dreams Into Reality

Find out how to make your retirement dreams a reality by focusing on long-term investments and preparing for unforeseen circumstances.

Read more »

Lights glow in a cityscape at night.
Stock Market

Top TSX Transportation Stocks to Buy in 2025

Investing in quality TSX transportation stocks such as CP and TFI should help you deliver outsized gains in 2025 and…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Canadian Energy Stocks: Suncor Stock vs. Cenovus Stock

These two energy stocks are top options for investors wanting income that pays now and in the future, but which…

Read more »

woman retiree on computer
Dividend Stocks

2 Stocks Canadians in Their 50s Should Own

Choosing the right growth stocks when you are just a few years away from your retirement can have enormous implications…

Read more »