"There are several ways to play the airline industry without buying the airlines themselves." explains Benjamin Shepard, a research editor for Personal Finance. Here, he looks seven stocks that are poised to profit as the sector "gets its wings again."
Hexcel Corp. (NYSE: HXL), he notes, is the largest producer of woven carbon-fiber sheets, which are extremely important for both Boeing's new 787 Dreamliner, as well as for the new Airbus A380. He rates thes tock a buy up to 25.
Aircastle (NYSE: AYR) and Genesis Lease (NYSE: GLS) are both aircraft leasing companies and publicly traded partnerships, and both are holdings in the Personal Finance model portfolio. He notes, "As airlines continue their recovery and passenger volume rises, older planes must be replaced and new planes added to the fleets."
Both partnerships, he notes, are based in Ireland and lease to both passenger airlines and cargo companies around the world. He says, ""Aircastle and Genesis are excellent bets on the continued growth of air travel and pay dividends of around 6% and 8%, respectively."
Shepard also likes Spirit AeroSystems Holdings (NYSE: SPR), which was formerly Boeing's Wichita, Kansas division. Spirit, he notes, is the largest supplier of aerostructures to Boeing and Airbus and is also developing new composite materials for the construction of aircraft. He considers the stock, which has been public for less than a year, a buy up to 39.
The advisor also points to other specialized suppliers to the air sector. One is Moog (NYSE: MOG.A), which manufactures hydraulic control and flight control systems for both commercial and military aircraft. He says, "With a five-year sales growth rate of more than 13%, Moog is a buy up to 46."
He also points to Goodrich Corp. (NYSE: GR), which he notes "has come a long way from its start as a rubber company 130 years ago." Goodrich now supplies a variety of components and systems for commercial aircraft, ranging engine components to landing gear and break systems. With an 11.6% five-year annual growth rate, he considers the stock a buy up to 67.
Finally, the advisor recommends RBC Bearings (NSDQ: ROLL), which makes ball bearings. Sales to aerospace companies such as Airbus, Boeing,, and Lockheed Martin, accounted for about 44% of net sales last year. He considers the stock a buy up to $43.
Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.
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