(MONEY Magazine) – What company is the world's largest producer of regional jets and personal watercraft, North America's leading maker of passenger railcars, and in a dead heat to be the world's No. 1 in snowmobiles?

If you didn't guess Bombardier Inc., don't feel bad. This diversified Canadian manufacturer is practically invisible to U.S. retail investors because it trades only on the Montreal and Toronto stock exchanges. Nevertheless, U.S. holders who have owned the stock over the past five years (without hedging currency exposure) have racked up a 32% annual return, five percentage points better than manufacturing king General Electric has delivered. And Bombardier is hardly a Canada-only story. Just 10% of its sales come from the provinces, with 50% from the U.S. and 30% from Europe. In other words, Bombardier looks a lot like a U.S. multinational firm--one with bright prospects at that.

After a record year in new contracts, the company sports an order backlog of $20 billion (in Canadian dollars), 2.5 times annual sales and double the backlog of January 1997. (A Canadian dollar is worth 65[cents] U.S.) While it's a stretch to describe any capital-goods maker as a recession play, Bombardier's major products--regional jets and mass transit systems--hold up well in downturns. Airlines prefer smaller planes then, and governments are loath to cancel transit orders for fear of exacerbating a slowdown. Given that, the stock seems undervalued at $18.65 (Can.), or 18.5 times next year's earnings estimates--well below its historical average. RBC Dominion Securities analyst Jon Reider, in fact, argues that Bombardier is now "ridiculously cheap."

Bombardier's largest business is aerospace--the company makes 50- to 70-passenger regional commercial planes, as well as corporate jets, including the well-known LearJet series. In one month this fall, it announced orders for 114 regional jets worth $3.6 billion (Can.) from Comair and Lufthansa, among other airlines. That's more than the entire aerospace division's sales totaled in 1996.

After planes, the story is trains. Among the current projects: 680 New York City subway cars and an entire 21-kilometer, 14-station transit system in Vancouver. The transit group's backlog is $9 billion (Can.), more than five times last year's total sales.

The one division that's lagging is recreational products. Demand for the company's Sea-Doo watercraft exploded in the early 1990s, but when growth fell off last year, Bombardier found itself overstocked. The result: Profits for the recreation group plummeted from $212 million to $1.4 million (Can.).

Nevertheless, Bombardier's financial profile remains strong. Debt levels are a modest 35% of total capitalization, and free cash flow should approach $1 billion (Can.) by 2001 (up from $200 million in 1997).

If you're worried about the hassles of buying a foreign stock, most large brokers will let you buy and sell Bombardier at regular commission rates, while taking care of currency conversions for you. As for currency fluctuations, the Canadian dollar has been battered; a rebound might add to any gains. Of course, further decline is possible, but given Bombardier's history and prospects, Canada's GE is worth a look.

--DUFF MCDONALD