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CAE Is An Ideal Way To Invest In The Recovery Of The Airline Industry

Jun. 08, 2020 7:35 PM ETCAE Inc. (CAE), CAE:CA5 Comments
Aristofanis Papadatos profile picture
Aristofanis Papadatos


  • Many investors want to invest in the recovery of the airline industry.
  • However, airlines are carrying excessive amounts of debt, and some of them are likely to go out of business.
  • As a result, airline stocks are highly risky.
  • CAE is offering similar upside potential to airlines but with much lower risk.

The airline industry has been severely hurt by the pandemic, which has caused a collapse in the global air traffic. This downturn is only temporary, as people will return to their normal flying habits the latest in a few years from now. It is thus natural that many investors want to invest in the recovery of the airline industry. However, airline stocks are highly risky, as they carry excessive amounts of debt, and some of them may go bankrupt. In this article, I will analyze why CAE (NYSE:CAE) is an ideal way to invest in the recovery of the airline industry.

CAE is the global leader in training for the civil aviation and defense aviation. It is the dominant player in the industry, with over 160 sites and training locations in more than 35 countries. Every year, it trains more than 120,000 civil and defense crew members and thousands of healthcare professionals worldwide.

A great advantage for CAE is the fact that it operates in strictly regulated industries, with mandatory and recurring training requirements. Airlines and business aircraft operators sign multi-year contracts with CAE and are obliged to follow these contracts in order to remain compliant with regulations.

Growth prospects

While CAE is the global leader in its business, it still has ample room to grow. It has a market share below 33% in the civil market and a market share of 7% in the defense market. Even better, the company benefits from the secular growth that characterizes air traffic. IATA expects the global air traffic to grow by 4.2% per year until 2027. The forecast was issued before the pandemic, but the ongoing disruption is only temporary, while the long-term growth trajectory remains intact.

Attractive investment

Although the stocks of airlines have bounced lately, they are still approximately 50% off their

This article was written by

Aristofanis Papadatos profile picture
I am a chemical engineer with a MS in Food Technology and Economics. I am also the author of 2 mathematics books ("Arithmetic calculations without a calculator" and "Word Problems") and perform almost all the calculations in my mind, without a calculator, making it easier to make immediate investing decisions among many alternatives. I invest applying fundamental and technical analysis and mainly use options as a tool for both investing and trading. I have nearly achieved my goal of early retirement, at the age of 45. In my spare time, I follow Warren Buffett's principle: "Some men read playboy. I read financial statements".

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (5)

For many years, I have made good money with this investment. Still invested and buying.
downlimit profile picture
market cap 5.56 billion 24 times the trail of .86 a share, 31 x forward .67 a share, 30% gross margins, 9 % net margin. trading at 2 x trail revenue 2.7 billion. no shorts. thinking fairly valued
5ofDiamonds profile picture
$CAE does look interesting @Aristofanis Papadatos

Thanks for the article.
Love CAE. Wish I got in before the rally started. Was trying to time it too perfectly.
my thoughts exactly
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