Investors looking for stocks with visible growth potential should consider Bombardier (TSX: BBD.B), Computer Modelling Group (TSX: CMG), and Stingray Group (TSX: RAY.A). Prices should rise further as the economic environment improves post-rate cut.
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Strong momentum
Bombardier has gained momentum since reporting its Q1 2024 quarterly results. Its share price of $86.54 is 40.2% higher since the earnings release on April 25. On a year-to-date basis, current investors are up 62.6%.
In the three months ending March 31, 2024, revenue and net income fell 11.8% and 63.6% year over year to US$1.3 billion and US$110 million, respectively. However, orders across the aircraft portfolio rose 60% versus Q1 2023, while backlog increased 4.9% to US$14.9 billion from a year ago.
Éric Martel, President and CEO of Bombardier, said, “Our team came flying out of the gates in 2024 on soaring aircraft orders and service revenues. The unit book-to-bill of 1.6 and $700m backlog increase are even more meaningful when you take stock of solid activity across traditional customers and fleets.”
Martel adds that Bombardier’s current aircraft portfolio remains competitive, and market share in the business jet market has grown in recent years. The $8.5 billion Canadian aircraft manufacturer will improve existing product offerings and expand Bombardier Defense, which opened its new office in Australia last month.
Banner year
Computer Modelling Group just had a banner year, as evidenced by its full-year fiscal 2024 results. This $1.1 billion global software and consulting company provides simulation software for the oil and gas industry. Its CMG segment develops and licenses reservoir simulation software, while BHV develops and licenses seismic interpretation software.
At $12.90 per share, the trailing one-year price return is 98%. The tech stock also pays a modest 1.6% dividend. For the 12 months ending March 31, 2024, total revenue, net income, and free cash flow (FCF) increased 19%, 33%, and 63% respectively to $73.8 million, $26.3 million, and $35.3 million compared to fiscal 2023.
Pramod Jain, CEO of CMG, said revenue growth was accompanied by growing FCF in fiscal 2024. The company will redeploy profitable growth and free cash flow (FCF) generation into its acquisition strategy. That will be a path to long-term value creation.
Jain expects CMG’s initiatives in fiscal 2024 to continue evolving in 2025. He believes the annual performance is a better reflection of the company’s progress and potential over the long term.
Turnaround
Stingray investors enjoy a 27.5% year-to-date gain on top of quarterly payouts. If you invest today, the share price is $7.57, while the dividend yield is 3.9%. This $518.8 million company is a music and video content distributor and provides business services and advertising solutions. The business made a turnaround in fiscal 2024.
In the 12 months ending March 31, 2024, revenue increased 6% to $345.4 million versus fiscal 2023, while net loss reached $13.7 million due to a one-time non-cash impairment of $56.1 million in goodwill in the Radio segment. However, adjusted FCF rose 28.7% year over year to $82 million.
Its President, co-founder and CEO, Eric Boyko, said that with a stable cost base, growing footprint, and growth opportunities, the financial results should improve in fiscal 2025.
No-brainer buys
Bombardier, Computer Modelling Group, and Stingray Group are no-brainer buys. The stocks have shown tremendous resiliency amid massive headwinds and continue to beat the TSX.
