Summary

• Bombardier Inc (TSX:BBD) is expanding its global customer service base to Europe.
• The coronavirus pandemic forced HEXO Corp (TSX:HEXO) to implement several cost-control measures this year.
• Both these stocks gravely suffered amid the pandemic but continue to secure heavy trading activities on the Toronto Stock Exchange (TSX).

Caught in the market volatility of the COVID-19 pandemic, many previously well-performing stocks lost their ground on the stock market. Some of these discounted stocks continue to draw the attention of investors. Two such Canadian stocks, currently available under the price of a dollar, are Bombardier Inc (TSX:BBD) and HEXO Corp (TSX:HEXO).

Both Bombardier and HEXO have been investors’ darlings for some time now as they continue to battle COVID-related challenges in their businesses. Let us look at these two companies closely to understand how they have been doing.

Bombardier Inc (TSX:BBD)
Current BBD Stock Price: C$ 0.34

Bombardier Inc recently announced its plans to expand its global customer service. Following a tie-up with Lufthansa Technik AG and ExecuJet Aviation Group AG, the company is looking forward to building its wholly owned service center in Berlin. It also signed a 10-year contract to service its 636 MOVIA metro cars in Singapore, the company said in an official statement on Tuesday, September 29.

Earlier this month, Bombardier’s deal to sell its train manufacturing business to French company Alstom SA was subjected to amendments. The revised deal, which saw a price reduction of US$ 350 million, is expected to close by the first quarter of 2021.

There are also reports about some uncertainty over Bombardier Inc’s agreement with Spirit AeroSystems Holdings. The Wichita-based company had initiated a deal to acquire Bombardier’s aerostructure business last year, with a deadline to close the deal by October 2020. However, in the light of terminating its acquisition plans of aerospace company Asco, Spirit expressed doubts about going ahead with the Bombardier deal. In a security filing on Tuesday, Spirit said that Bombardier “may commence legal actions” over breaking the agreement.

BBD STOCK PERFORMANCE

Bombardier stocks took quite a beating when the markets tanked around the onset of the pandemic in March. Its stock price tumbled about 69 per cent in the span of a month, falling as low as C$ 0.43 on March 24. It recorded a decline of 82 per cent year-to-date and about 25 per cent in the last six months.

In the last 10 days, it saw an average trading volume of 7.1 million.

BBD FINANCIAL RESULTS

Bombardier incurred a net loss of US$ 223 million in its second quarter ending 30 June 2020. Its consolidated revenues were US$ 2.7 billion in Q2 2020, down 37 per cent year-on-year. The company also saw a 93 per cent YoY drop in its earnings before income and taxes (EBIT), amounting to US$ 427 million, in the latest quarter.

The Canadian business jet and train manufacturer currently has a market capitalization of C$ 734 million. It has a price-to-cash flow (P/CF) of 12.4, as per the data on the TSX.

HEXO Corp (TSX:HEXO)
Stock Price: C$0.86

The coronavirus pandemic forced HEXO Corp to take many cost control measures this year. The pot company decided to sell its Niagara unit for a loss of US$ 2.8 million in May, laid off employees and reduced production. It also held an at-the-market (ATM) equity program in August where it collected gross proceeds of about C$ 35 million from selling approximately 33 million common shares.

Back in April, HEXO was also handed a delisting notice by the New York Stock Exchange (NYSE) for its stocks trading under the US$ 1 listing price over a period of time. HEXO has till December 2020 to raise its stock price in order to save itself from being delisted.

On the bright side of news, HEXO Corp was able to hop on ‘Cannabis 2.0’ trend in Canada and launch a new line of vape pens and other ingestible cannabis products. It also expanded its medical marijuana business to Israel back in July.

Earlier in September, HEXO appointed former Rx Drug Mart CFO Trent MacDonald as its new chief financial officer, who is due to join the company in the coming months.

HEXO STOCK PERFORMANCE

Since its March lows of C$ 0.52 (March 19), HEXO shares have gained over 65 per cent in six months’ time. Though its stock price declined 58 per cent year-to-date (YTD), it has been crawling closer to its pre-pandemic level in February.

HEXO stocks currently have a 10-day average trading volume of 1.5 million.

HEXO FINANCIAL RESULTS

HEXO Corp’s total revenue from sales stood at C$ 30.9 million in its third fiscal quarter ending 30 April 2020, up 94 per cent from Q3 2019. It saw a gross margin of C$ 5.7 million, a 40 per cent quarter-over-quarter increase. Its adjusted EBITDA sequentially declined to C$ 4.3 million in Q3 2020.

The company’s operating expenses amounted to $26.8 million in the latest quarter.

HEXO Corp currently has a market cap of C$ 415 million. Its price-to-book (P/B) ratio is 0.74, while debt-to-earnings (D/E) ratio is 0.21, as per the data available on the TSX.