Aerospace stocks have trailed the broader markets by a wide margin over the past five years due to several reasons, including the COVID-19 pandemic, inflation, rising oil prices, and elevated interest rates.
However, the drawdown allows you to identify fundamentally strong companies at a lower multiple and benefit from outsized gains when sentiment recovers. In this article, I have identified two Canadian aerospace stocks to buy and hold in April 2025.
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Is this TSX aerospace stock undervalued?
Valued at a market cap of $8.2 billion, Bombardier (TSX:BBD.B) has successfully transformed into a business aviation company following the sale of its transportation business to Alstom in January 2021. It now focuses exclusively on its industry-leading portfolio of Challenger and Global business jets while expanding its defence and service operations.
The Canadian aircraft manufacturer reported robust financial results for 2024, with revenues of $8.7 billion, exceeding guidance. Despite delivering 146 aircraft, it was slightly below Bombardier’s target of 150 to 155 units due to supply chain challenges. In 2024, Bombardier reported an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $1.36 billion, with adjusted earnings before interest and taxes of $915 million, both exceeding guidance.
Last May, Bombardier unveiled strategic initiatives as it plans to diversify revenue streams through the expansion of its Services, Defense, and Pre-owned aircraft businesses, which could collectively represent 50% of total revenues by 2030.
Bombardier’s Services segment has already achieved its $2 billion revenue target a year ahead of schedule, with expectations of continued mid- to high single-digit annual growth through 2030. The Defense portfolio is projected to generate between $1 billion and $ 1.5 billion by 2030, while the Pre-owned market could contribute an additional $500 million to $1 billion.
Bombardier maintains a global network of service facilities supporting over 5,100 in-service aircraft worldwide. The company remains committed to strengthening its financial position, targeting an adjusted net debt-to-adjusted EBITDA ratio of between 2 and 2.5 times.
Bombardier’s capital allocation framework emphasizes the disciplined deployment of excess liquidity to support both organic and inorganic growth initiatives while creating long-term shareholder value.
The airline maker is forecast to increase its free cash flow from $232 million in 2024 to $920 million in 2026. So, if the TSX stock is priced at 20 times trailing free cash flow, it should more than double over the next two years.
Is this TSX stock a good buy right now?
Cargojet (TSX:CJT) has established itself as Canada’s premier cargo airline over its 23-year history. Valued at a market cap of $1.2 billion, Cargojet controls over 90% of the domestic overnight air cargo lift available in Canada.
Cargojet operates a comprehensive network connecting 16 major Canadian cities, transporting over 25 million pounds of time-sensitive cargo weekly with industry-leading on-time performance consistently above 98%.
Its business model features long-term customer contracts that generate 75% of annual revenues, including minimum revenue guarantees and cost pass-through provisions. The company operates across three key segments: Domestic Network (38% of revenue), ACMI (Aircraft, Crew, Maintenance and Insurance) services (29%), and Charter operations (16%).
Following a recent three-year agreement for transpacific scheduled charters and continued growth in domestic volumes, Cargojet reported strong financial performance with fourth-quarter revenue of $293 million.
Analysts expect Cargojet to report adjusted earnings of $6.16 per share in 2026, up from $5.32 per share in 2024. So, priced at 12.3 times forward earnings, the TSX stock trades at a 100% discount to consensus price targets.
