Bombardier, HEXO & Aphria: 3 stocks under C$6 set to boost your investment

Summary

• Investors are on the hunt for stocks that has the potential of good returns in the long run.
• We analyze the stock performance and financials of three companies – Aphria, Bombardier, and HEXO – all of which are trading under C$ 6 per share.
• Increased sales in pot market amid pandemic has helped stock prices of Aphria and HEXO to surge.
• Bombardier stocks have been trading flat in the last three months, but the company is trying hard to cut debt and increase liquidity.

The coronavirus pandemic-led stock market crash has wiped off millions of investors’ capital in mere weeks. Hungry for gains, seasoned and newbie investors are on the hunt for stocks that have either fallen out of favor (and may bounce back) or performed well in the face of the pandemic. In midst of this economic recession and changing consumer trends, handful pot stocks such as Aphria and HEXO are managing to weather the turbulent times with increased sales. Meanwhile shares of former large-cap giants such as Air Canada and Bombardier are now available at massive discounts after stock prices plummeted in recent months.

In this article, we look at three stocks currently trading under C$ 6 and has the potential to return good yields to investors.

Aphria Inc. (TSX:APHA)

Stock Price: C$ 5.98

Stocks of Aphria ended the month in red after failing to impress investors with its mixed fourth quarter results. But that’s no bar to dismiss this rising pot firm. In the last three months, the stocks chartered a 45 percent growth in three months and at one point, was trading above its highest pre-pandemic levels in 2020. Aphria has yielded over 338 percent returns to its investors over a decade.

Sales in pot market has surged is projected to touch C$ 4.1 billion in 2021 while the global cannabis market is forecast to swell to US$ 97.35 billion by 2026.

Aphria registered net revenue of C$ 152.2 million for three months ending May 31, 2020, an 18 percent increase from C$ 128.6 million in the same period last year. Net loss for the fourth quarter of fiscal year 2020 stood at C$ 98.8 million as compared to a net income of C$ 15.8 million for the same period last year. The company ended the quarter with C$ 497.2 million cash in hand.

Aphria’s current market cap is C$ 1.7 billion and P/B ratio is 0.951 percent.

HEXO Corp. (TSX:HEXO)

Stock Price: C$ $ 1.01

HEXO stocks have profited with the recent surge in legal cannabis industry, posting 7 percent gains in a month. While the scrips are still trading below its pre-pandemic levels in 2020, the company managed to turn around its fortunes and yielded 67 percent returns in last three month.

In the third quarter fiscal 2020 results, HEXO’s top line increased by 30 percent quarter-over-quarter to C$ 30.9 million. Gross margin before fair value adjustments increased 7 percent to C$ 8.8 million as compared to C$ 5.7 million in the prior quarter.

The company also closed C$ 46 million public offering which boosted its liquidity position. Its adult-use cannabis grams sales rose by 42 percent QoQ. The cannabis firm recently introduced three ready-to-use vape pens for both adult-use and medical consumers.

Its current market cap is C$ 468 million and P/B ratio is 0.821 percent.

Bombardier (TSX:BBD)

Stock Price: C$ 0.415

The pandemic market crash has decimated Canadian aviation and transportation manufacturer Bombardier’s stock that shed 78 percent of its value this year. In the last six months, the company laid off 2,500 aerospace workers after suffering losses due to pandemic related disruptions.

At the end of second quarter, Bombardier’s consolidated revenues stood at US$ 2.7 billion, down 37 percent YoY, while adjusted EBIT loss of US$ 427 million. It has pro-forma liquidity of nearly US$ 3.5 billion, including approximately US$ 1.7 billion of cash, US$ 738 million undrawn revolving credit facility, and US$ 1.0 billion senior secured credit facility. Free cash flow usage stood at US$ 1.0 billion.

Today, Bombardier is a mere shell of its former self. Between 2015 and 2020, the company’s stock price has declined 75 percent. It racked up massive debts on the CSeries aircraft in 2014.

By 2020, the company has offloaded its Dash 8 turboprop, CRJ Regional Jet, Q400 and CSeries programs. While selling off its business units has improved the company’s balance sheet, but also chopped its growth engines.

To improve its liquidity position and reduce debt, Bombardier announced the sale of its transportation division to Alstom, which was approved by the European Commission in July this year.

Bombardier stocks have mostly been trading flat over the last three months. Its current market cap is C$ 883 million and P/B ratio is negative (minus) 0.117 percent.

Bombardier cash usage for the second quarter was better than analyst expectations. Going forward, the manufacturer will become a pure-play maker of private business jets. It also appointed new CEO Éric Martel in hopes to turning around fortunes. Global transportation is expected to pickup slowly as borders open up post-pandemic. Picking up Bombardier stocks at such discounted rates may prove a good asset for investors in the future.