Investor loves this “undiscovered” aerospace stock

LionGuard Capital Management CEO and CIO Andrey Omelchak told BNN Bloomberg’s Market Call on April 22 that Magellan Aerospace  (Magellan Aerospace Stock Quote, Chart, News, Analysts, Financials TSX:MAL) remains underfollowed despite strong momentum in both defence and commercial aerospace.

Omelchak said the company is still “very much undiscovered” because of its high insider ownership, with one shareholder controlling more than half the company, a structure he said can limit institutional interest. Even so, he said the business is “absolutely booming.”

The investor noted that defence now makes up about 30% of Magellan’s business and could rise to 45% to 50% over time, while the aerospace side is also benefiting from strong demand tied to major OEM backlogs.

“We’re seeing a record request for proposals, especially as it relates to the defence business,” Omelchak said. He added that Magellan is working with Canada’s defence sector and with a number of European countries that either are or could become customers.

Omelchak said the company also has significant operating leverage, arguing that incremental business should come through at higher margins and support stronger free cash flow generation. While the broader aerospace and defence group has already re-rated, he said Magellan still stands out on valuation.

“It’s probably one of the cheapest companies you can find, if not the cheapest, across North America,” he said.

Magellan shares have gained 83.28% over the past 12 months and 129.9% over five years. Of the analysts covering the stock, three rate it “Buy,” with no “Hold” or “Sell” ratings, and the consensus price target is $28.17.

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