The new year is coming before you know it. In fact, it’s just around the corner! And with a huge rally in the markets over the last two months, it could very well be a good time to get back into growth stocks.
That’s why today, I’m going to focus on two aerospace and defence stocks on the TSX today. Each of these offers enormous growth in the near term for 2024. However, both also could offer huge long-term growth as well. So, let’s get into it.
CAE
When it comes to aerospace and defence stocks, CAE (TSX: CAE) stock usually comes up first and foremost — and for good reason. The company focuses on creating simulation training for every aspect of aerospace and defence, from flying helicopters to going to space.
Moreover, the company continues to find new ways of creating growth — so much so that it continues to soar past earnings estimates quarter after quarter in the last year. Most recently, this included strong second-quarter results, with revenue reaching $1.089 billion for the quarter and earnings per share of $0.18.
The company did see operating income come down to $100.6 million but also achieved a record $11.8 billion adjusted backlog. It also announced the sale of its healthcare arm for an enterprise value of $311 million. This will allow CAE stock to focus on its “large core simulation and training markets.”
Yet CAE stock still offers value for today’s investors — especially a long-term one. Shares trade at 2.03 times sales and just a 13.4 enterprise value over earnings before interest, taxes, depreciation, and amortization (EBITDA). Furthermore, shares are up 3% year to date but down 22% since 52-week highs.
Magellan
Another aerospace and defence stock to consider is Magellan Aerospace (TSX: MAL), which creates the components for these aerospace and defence structures. What’s more, if something goes wrong, the company can be hired to replace and service the parts.
The only issue is that while the company has had some strong earnings results, unfortunately, earnings have missed estimates during the last two quarters. There were many influences on these factors, including supply-chain demands and the ongoing war in Ukraine.
During the third quarter, Magellan stock achieved $213 million in revenue, gross profit of $19.9 million and net income of $3.7 million. These were all up far higher than the year before, showing the company is still making major improvements, despite missing estimates. However, expenses also climbed year over year, adding to the company’s problems.
The thing is, are these long-term issues? In short, it doesn’t seem so. The company has been identifying ways to restructure and reduce costs, allowing today’s investors to get in on a potential deal. Plus, you can add a dividend yield of 1.34% as of writing, with shares trading down 18% year to date and at just 10.74 enterprise value over EBITDA. Overall, these are two strong aerospace and defence stocks that have far more room to grow — enough to see massive income come your way in 2024 and beyond.
