Business & Investment

RRSP Stock Pick: Great Buy once in February 2021

Magellan Aerospace (TSX: MAL) Is Diverse suppliers Of the components to the aerospace industry. The company designs and manufactures aviation structural components for the aerospace market, including advanced products and complementary specialty products for the defense and space markets. Magellan also supports the aftermarket through the supply and repair of spare parts and overhaul services.

The company has a price-earnings ratio of 15.15, a price-to-book value ratio of 0.65, a dividend yield of 4.56%, and a market capitalization of $ 535 million. At Magellan Aerospace, debt is used very conservatively, as evidenced by the debt-to-capital ratio of only 0.13. The company has excellent performance indicators with an operating margin of 6.56% and a return on equity of 4.39%.

The company’s strategy is to focus on the choices Core competence Within the aerospace industry, these capabilities are important to meet customer needs. These include precision machining of a wide variety of aerospace metal alloys, complex high-tech alloy casting, engine repair and overhaul technologies.

The company supplies design engineering products to international customers in the commercial and defense markets. The components are manufactured with aerospace tolerances using traditional high speed automation equipment. Features also include precision casting of components attached to the engine and airframe.

The company also offers systems for developing and selling its own space and rocket motor systems to its global customer base. The combination of Magellan’s customer collaboration and its dedication to innovation combined with low-cost sourcing from emerging markets has enabled Magellan to win complex, targeted assembly programs.

The company’s business typically includes strong contracts for a period of 3 to 10 years. The component products and systems offered are related to the sale of the final product by Magellan’s customers and may be terminated, modified or reduced at the choice of the company’s customers.

However, upon termination of the program, the terms of some basic contracts will refund the company a proportional amount of profits from the work actually performed, in addition to the acceptable costs incurred by the termination date. Is stipulated. Products that are delivered directly to the end user are usually less likely to experience variable terms, with a certain quantity of contracts over a certain period of time.

The aerospace industry is tightly regulated by specialized government agencies in most countries, including Canada, the United States and the United Kingdom. Magellan is accredited in such jurisdictions and, in some cases, by individual branded suppliers to design and maintain parts used in specific aircraft models.

By leveraging the purchasing power of its customers, the company minimizes increased costs for materials and parts. Magellan procures the raw materials and components needed to meet its contractual requirements from the global market at competitive prices. Wherever possible, Magellan includes price increase formulas and other provisions in its contracts with customers to share the risk of price increases for raw materials.

Recently, Magellan has invested heavily in cutting-edge technology to advance its capabilities and maintain its competitive advantage. These investments have the potential to pay abundant dividends in the long run.

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Stupid contributor Nikhill Kumar There are no positions in any of the listed stocks.

RRSP Stock Pick: Great Buy once in February 2021 RRSP Stock Pick: Great Buy once in February 2021

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