The highly unexpected decision of the U.S. Department of Commerce to side with Canadian transportation manufacturer Bombardier, Inc. (TSX:BBD.B) has sent the company's share price skyrocketing, up nearly 20% since the announcement late last week, at the time of writing.
Bombardier is a company which has had its valuation hit hard in recent years following investor concerns that the company's aerospace division would not be able to "take off" (pun intended), as well as concerns that delays with many of the projects currently underway in the company's train division would continue to negatively impact long term earnings growth accordingly.
While I believe that headwinds in these two sectors persist, despite the recent ruling by the U.S. Commerce Department, I would also expect that Bombardier's shareholder base will be emboldened by this announcement, leading to increased buying in the short term.
Bombardier remains a speculative play in either direction, and I would encourage investors to avoid Bombardier as a long term portfolio holding and consider other companies with proven order backlogs and wider moats, such as Boeing Company (NYSE:BA).
With a dual class share structure continuing to hamper productivity and efficiency at the company's operational level, and given the lack of balance sheet strength we see with Bombardier's fundamentals as compared to its peers, there are simply much better options out there for investors.
Invest wisely, my friends.
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