Aerospace may feel out of reach for everyday investors, but CAE (TSX: CAE) deserves a look if you want a high‑quality, long‑term bet. It’s a global leader in flight simulation and pilot training. And in a decade defined by a rebound in aviation and rising defence spending, CAE could be Canada’s best investment. Let’s get into why.
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About CAE
CAE builds advanced flight simulators and offers training services for airlines, defence forces, and even healthcare. It operates in 35 countries and employs about 13,000 people. The Canadian stock’s global scale gives it an edge few can match. It’s not flashy, but its work is essential to aviation safety.
As of writing, CAE stock is around $36.47, up about 43% over the past year. Its market cap sits at approximately $11.8 billion. The valuation isn’t sky‑high, with a price‑to‑earnings ratio of about 28 times last year’s earnings per share of $1.27. That’s a fair price for a high‑quality industrial with runway ahead.
CAE’s recent quarterly results aren’t in the public domain, but its annual report shows strong momentum. The latest free cash flow numbers hit about $140 million for the latest quarter, matching last year, which suggests consistent cash generation.
A stable industry
CAE also boasts a significant backlog. The Canadian stock’s latest public filings reported an adjusted backlog of around $18 billion, including simulator orders and training contracts across the civil and defence sectors. That backlog offers multi‑year revenue visibility. With airlines ramping up travel again and nations boosting defence budgets, CAE is well‑positioned for years of steady growth.
Defence and commercial aviation form a balanced revenue mix. Civil aviation rebounds as passenger traffic returns to pre‑pandemic levels. Defence budgets are rising amid global tensions. CAE sits at the convergence of both trends. It’s a Canadian stock that benefits from global forces, not only stock market trends.
CAE’s business model includes recurring revenue. Airlines rely on its training centres and simulation software for initial and recurrent pilot training. Defence ministries need support for complex aircraft and systems. CAE has developed deep expertise over its 77‑year history, and operating in such a niche makes it a trusted partner worldwide.
More to come
The Canadian stock also expanded recently by buying a majority stake in SIMCOM for US$230 million. That move enhances its reach in business‑jet training, a fast‑growing segment. It shows management is doubling down on areas with strong growth potential.
Its balance sheet is healthy. Moderate debt and strong cash flow give it flexibility to invest in research and development (R&D), pursue acquisitions, and return capital to investors. That stands in contrast to many high‑growth tech plays that burn cash or carry heavy debt.
For long‑term investors, CAE checks all the boxes: global scale, consistent cash flow, multi‑year backlog, and exposure to secular industry trends with strong tailwinds. Its valuation is reasonable, too. It doesn’t offer the instant gratification of a flashy tech stock. But over the next 10 years, CAE could produce compound returns as aviation demand rebounds and global governments pour money into defence. It’s a choice that rewards patience and big‑picture thinking.
Bottom line
All together, if you’re looking for a Canadian stock to hold through the decade, CAE is a smart pick. It’s built on global infrastructure, trusted by highly regulated industries, and backed by strong cash flow. That makes it one of the best bets in Canada right now for long‑term growth.
