Discover a Potent TSX Stock to Boost Your Wealth

Bombardier’s strong liquidity position, improving overall profitability, and growing backlog could help its stock continue rallying in the years to come.

Jitendra Parashar

Author Bio Jitendra Parashar is a financial journalist who has been writing for The Motley Fool Canada since June 2020. With more than 13 years of experience in financial journalism, equity research, and market analysis, he helps investors understand market developments and identify long-term investment opportunities. Before joining The Motley Fool Canada, Jitendra spent several years at Market Realist covering U.S. equities, major economic developments, and developments in the automotive and technology industries. He also worked in commodity and currency research at brokerage firms, gaining insight into how economic trends, central bank decisions, and geopolitical events influence financial markets. Jitendra writes for beginner investors, dividend seekers, and Canadians looking to build wealth over the long term. He also contributes to the daily TSX Today series, explaining key Canadian market developments and highlighting news investors should watch. Based in India, Jitendra follows Canadian and U.S. markets closely. Outside of work, he enjoys travelling in the Himalayas, street and nature photography, and exploring programming and artificial intelligence. Education MBA in Finance and International Business Bachelor's degree in Journalism Areas of Expertise Canadian and U.S. financial markets, long-term equity investing, dividend investing, macroeconomic and geopolitical trends, automotive stocks, emerging technologies, and artificial intelligence. Social Media Profiles LinkedIn Muck Rack Favorite Investment Quote “Simplicity is the master key to financial success.” — John C. Bogle

Published December 3, 2024 4:00 pm EST

If you’re looking to boost your wealth by investing in the stock market, the first step is finding a stock with solid growth potential and a clear strategy for long-term growth. One such company on the TSX that deserves your attention is Bombardier (TSX: BBD.B). After struggling for years, this Dorval-based company has transformed itself into a top global company in the business aviation sector, focusing mainly on the production of high-demand private jets.

Let’s take a closer look at why Bombardier could be a really attractive, wealth-boosting addition to your portfolio and why now could be the right time to jump in.

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Bombardier stock

After delivering a 343% positive return in the previous three years, Bombardier stock has extended this rally by 83% so far in 2024. With this, it now trades at $97.26 per share with a market cap of $9.8 billion.

One of the key reasons for Bombardier stock’s eye-popping rally in recent years could be its remarkable turnaround story and strong financial performance. Besides focusing on manufacturing high-performance private jets, the company has also boosted its footprint in the lucrative aftermarket services.

In 2023, the Canadian business jet maker registered a 16.4% YoY (year-over-year) increase in its total revenue to over US$8 billion due mainly to higher jet deliveries and record-breaking aftermarket annual revenue of US$1.75 billion. This trend clearly reflects that the aftermarket business, which includes maintenance, repair, and parts replacement, is gradually becoming a reliable and growing source of revenue for Bombardier. These positive factors helped the company post adjusted annual earnings of US$3.94 per share in 2023, five times more than its previous year’s earnings of US$0.74 per share.

Focus on profitability and debt reduction

In the last few years, improving profitability and reducing debt have been two of Bombardier’s main areas of focus. In 2024, the company maintained this trajectory with impressive third-quarter results. For example, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed by 7.7% YoY to US$307 million. This rise in EBITDA not only reflects its ability to drive efficiency despite challenging macroeconomic conditions but also reflects its disciplined financial approach to reducing liabilities.

At the end of the third quarter, Bombardier had US$1.2 billion in available liquidity, supported by a US$150 million increase in its revolving credit facility. This strong liquidity position could allow the company to weather economic uncertainties without compromising on growth initiatives.

Strengthening backlog reflects a strong outlook

If the demand for its business jets is any indication, Bombardier seems well-positioned for long-term growth. By the end of the September quarter, the company reported a robust backlog of US$14.7 billion.

Growing global interest in high-performance private jets like the Global 7500 and the upcoming Global 8000 has fueled this strong backlog, providing Bombardier with a clear revenue pipeline for the years ahead. This sustained demand not only highlights Bombardier’s reputation for innovation and quality but also ensures a stable foundation for future growth. These fundamental factors could help Bombardier stock continue rallying in the coming years as it benefits from its strengths in the business aviation sector.