Why Are Industrials Stocks Air Canada (TSX:AC) & Bombardier (TSX:BBD.B) Trending?

December 08, 2020 11:47 AM EST | By Kunal Sawhney
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  • Industrial stocks of Canadian companies Air Canada (TSX: AC) and Bombardier Inc (TSX: BBD.B) are rallying on the Toronto Stock Exchange (TSX).
  • Bombardier stocks shot up almost 27 per cent in the last three months and by about 89 per cent in the month of November.
  • As air travel resumed in phases later in the year, Air Canada stocks rebounded by almost 51 per cent in the last three months.

After a dreary few months of pandemic-riddled losses, things are beginning to look up for Canadian companies Air Canada (TSX: AC) and Bombardier Inc (TSX: BBD.B), thanks to the progress towards working COVID-19 vaccines. The anticipation of a potential COVID jab is also drawing investors’ attention back to these riskier industrial stocks, which are now available at discounted prices.


Bombardier Inc (TSX: BBD.B)

Current Stock Price: C$ 0.495

The novel coronavirus pandemic left Bombardier stocks quite depreciated this year, down by about 74 per cent year-to-date (YTD). But since plummeting during the market crash around March and April, Bombardier shares bounced back by over four per cent in the last eight months.

The scrips shot up almost 27 per cent in the last three months and by about 89 per cent in the month of November alone.

Bombardier stocks witnessed heightened trading activities throughout the pandemic, posting an average share movement volume of 11.3 million in the last 10 days.

While Bombardier noted a five per cent year-over-year (YoY) decline in its total revenue, it managed to score a 20 per cent YoY spike in its business aircraft manufacturing revenues the third quarter ending 30 September 2020.

Bombardier also secured a free cash flow usage of US$ 0.7 billion and an operating cash flow usage of about US$ 0.6 billion by the end of September 2020.


Air Canada (TSX: AC)

Current Stock Price: C$ 27.48

As lockdown restrictions left Air Canada’s business in a lurch this year, its stock price crashed by over 43 per cent YTD. But in the last three months, as air travel resumed in phases, Air Canada scrips rebounded by almost 51 per cent.

The airline’s shares climbed about 17 per cent in the last six months and by over 11 per cent in December so far.

The Canadian carrier also noted an increase in its share trading activities since the onset of the pandemic around March. It posted a 10-day trading volume of 7.75 million.

Unlike the improvement in its recent stock performance, Air Canada recorded an 86 per cent YoY decline in its revenue of C$ 757 million in the third quarter of 2020.

It also incurred an operating loss of C$ 785 million in Q3 ending 30 September 2020.

Air Canada reported that its total revenue passengers carried in the third quarter was down a significant 88 per cent YoY.

It posted an unrestricted liquidity of C$ 8.18 billion as of September 2020.

Air Canada said that it managed to generate an additional liquidity of around C$ 6 billion since March 2020, after it resorted to many cost cutting measures amid the pandemic.


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