If you’re looking for some defence in your own portfolio, now is a great time to consider defence stocks. The market may be down, but defence stocks will remain essential. That’s mainly because these companies are in large part funded by the government through long-term contracts. So today, let’s look at three strong choices among defence stocks for Canadians to consider on the TSX today for November 2023.
CAE stock
First up, we have well-known CAE (TSX: CAE) among defence stocks. The stock remains a strong, low-risk buy recommended by analysts again and again. This comes as the company continues to surge past earnings estimates quarter after quarter.
The defence simulation company simply has kept moving forward as usual. CAE continues to create deals and partnerships with companies looking to benefit from its simulation training programs. It has also provided these programs outside the defence sector as well. Doctors, helicopter pilots, even aerospace craft all use the company’s programs.
Further, CAE stock has also been acquiring businesses to put under its umbrella of products. During its last quarter the stock saw a 13% jump in revenue as its commercial aviation sector rose back. Its flight and health simulators also saw net income rise to $65.3 million from just $1.7 million the year before. It has since gone on to sell its healthcare business to the United States for $311 million, allowing CAE stock to focus on securing growth opportunities in larger, core simulation and training markets.
Shares are now up 9.5% in the last year, with a dividend yield currently at 2.77% as of writing.
Magellan
Another of the formidable defence stocks to consider is Magellan Aerospace (TSX: MAL), yet another strong company that perhaps allows for a growth opportunity. This comes after the stock fell after missing its latest earnings report.
The company creates parts for aerospace structures, as well as maintenance and repair. It has been going steady as usual, extending its partnership with Boeing most recently to provide exhausts for Magellan stock. It looks like it’s one of the defence stocks that while it’s doing alright, isn’t looking to expand much further until there is more cash on hand, and growth in revenue.
For now, shares are up 2.7% in the last year, with the company offering a 1.38% dividend yield as of writing.
Héroux-Devtek
Finally, we have the last on our list of defence stocks. Héroux-Devtek (TSX: HRX) stock is another strong option, as a company that designs, manufactures, and sells some of the most critical components for aircraft structures. And after missing one earnings quarter, it has gone onto surge past estimates for the last two quarters in a row.
HRX stock now looks like a strong investment, with analysts slowly but surely coming around to recommending the stock as a buy. The company, similarly to CAE stock, is now one of the defence stocks looking for opportunities after a strong recent quarter.
Sales rose 23.3% year over year in the first quarter, with operating income tripling from a year ago to $7.5 million! Furthermore, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were up 43.2% to $16.4 million. With rising cash flow, it now expects to put that cash to good use through growth opportunities including acquisitions.
Shares are now up 21.4% in the last year alone, providing superb growth for investors among defence stocks this November.
