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CAE: Take Flight in Aviation and Healthcare

09/27/2018 5:00 am EST

Focus: INDUSTRIALS

Tony Daltorio

Editor, Investors Alley Premium Digest

Last summer, Boeing (BA) released a study that estimated the world’s airlines will need about 637,000 new pilots over the next two decades to meet demand, notes Tony Daltorio, editor of Growth Stock Advisor.

Even here in the slower growing U.S. market, more pilots will be desperately needed. Boeing said the U.S. market will need about 117,000 new pilots over the next two decades.

CAE (CAE) has been in business since 1947 and offers a “pure play” training company driven by the long-term growth in civil aviation around the world.

It continues to define global training standards with its innovative virtual-to-live training solutions to make flying safer, maintain defense force readiness and enhance patient safety.

CAE has the broadest global presence in the industry, with over 160 sites and training locations in over 35 countries with over 50 training locations, more than 250 full flight simulators, over 2000 instructors and more than 160 aircraft. Each year, CAE trains more than 120,000 civil and defense crew members and thousands of healthcare professionals worldwide.

The company also is riding the wave of simulation-based training in areas with critical tasks including defense and security as well as healthcare. The company sees significant opportunities for long-term growth as the healthcare market increasingly adopts simulation as a means of training.

CAE Healthcare was the first company to bring a commercial Microsoft HoloLensmixed-reality application to the medical simulation market. By using the HoloLens, the CAE Vimedix AR ultrasound simulator integrates real-time interactive holograms of the human anatomy.

Another reason I like CAE is that much of its revenues are recurring due to long-term agreements with many airlines as well as military services. In 2017, 60% of its revenues were recurring, up from 43% in 2008 and just 15% in 2001.

In addition, of its $2.7 billion in 2017 revenue, 58% came from civil aviation training solutions and 38% from defense and security training programs. The remainder came from its small, but rapidly growing, healthcare business. Overall, CAE is a company with solid fundamentals.

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