Sometimes, the best opportunities in the stock market appear when a great company gets overlooked. Whether it’s due to short-term noise, market rotation, or general investor fatigue, even quality businesses can fall out of favour temporarily. That’s when long-term investors should pay close attention. One Canadian company that fits this description is CAE (TSX:CAE). This Canadian stock has everything you’d want for a buy-and-hold strategy: a global footprint, growing demand, and strong long-term tailwinds. And while it’s off its pandemic lows, CAE is still trading well below its all-time high, making now a potentially smart time to jump in.
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The stock
CAE is a global leader in training and simulation solutions. It’s best known for flight simulators used by commercial airlines, defence forces, and even space agencies. The Canadian stock also trains healthcare professionals with programs for ultrasound imaging, patient simulation, and surgical navigation. It operates in over 35 countries and employs more than 13,000 people. What makes CAE so compelling is the way it sits at the intersection of innovation, safety, and regulation, three things that rarely go out of style.
As of writing, shares of CAE stock are well below the pre-pandemic high of over $42. While the stock has climbed 25% in the past year, it’s still considered undervalued by many analysts, especially with shares down 17% from those highs.
The numbers
In its latest earnings report, CAE delivered strong results for the third quarter of fiscal 2025. Revenue came in at $1.22 billion, up from $1.09 billion a year earlier. Net income from continuing operations was $170.3 million, or $0.53 per share, compared to $60.7 million, or $0.18 per share, in the prior year. Even on an adjusted basis, earnings per share (EPS) rose to $0.29, signalling stronger margins and more efficient operations. Perhaps most impressively, CAE generated a record $409.8 million in free cash flow during the quarter, giving it the flexibility to pay down debt, reinvest, or consider acquisitions.
The Canadian stock also reported $2.2 billion in new orders, pushing its total adjusted backlog to a record $20.3 billion. That number represents work already booked and revenue that will be realized in the years to come. It’s a clear signal that demand is strong, especially in civil aviation, where pilot shortages and fleet expansions are fuelling the need for training services.
More to come
Civil aviation remains CAE’s bread and butter. Airlines around the world are scrambling to hire and train pilots to meet booming travel demand. According to Boeing’s long-term outlook, the world will need over 600,000 new pilots by 2040. That’s good news for CAE, which supplies simulators and runs training centres for major airlines. Meanwhile, the defence segment continues to grow as governments invest more in mission readiness and advanced technologies. CAE is playing an increasing role in this space through its simulation-based training solutions.
The healthcare segment, while smaller, offers future upside, too. As hospitals and training institutions look for ways to reduce medical error and improve patient outcomes, simulation training is gaining traction. CAE’s leadership in this space, combined with decades of experience in simulation technology, gives it a head start in a field that’s only beginning to scale.
From a financial standpoint, CAE is on solid ground. The Canadian stock has taken steps to reduce debt and improve its balance sheet. During the pandemic, it pivoted quickly, made strategic acquisitions, and repositioned itself to benefit from the rebound in aviation. Now, it’s in growth mode again, with recurring revenue and strong order flow backing up the story.
Bottom line
So, is CAE a stock to buy and hold forever? It just might be. It has global demand, essential services, strong financials, and a long runway for growth, no pun intended. At around $36 per share, it’s not at a bargain-bin price, but it’s far from expensive. For investors with $1,000, $5,000 or even $10,000 to invest, CAE offers a chance to own a piece of Canada’s innovation story with the added benefit of global exposure.
