Given the tight times at the airlines, being an outfit that can provide regulator-approved aircraft replacement parts puts a firm in a favorable position. One of the biggest independent companies in the group is headquartered in Hollywood, Florida.
Heico Corporation (NYSE: HEI) is engaged in the design, manufacture and sale of aerospace and defense products and services. The firm specializes in producing FAA-approved aircraft components, such as combustion chambers and gas-flow transition ducts. It also provides jet engine overhaul and repair services. In addition, the company makes such electronic equipment as power modules and cooling systems. Customers include AMR Corporation (NYSE: AMR), Boeing (NYSE: BA) and UAL Corporation (NASDAQ: UAUA). United Technologies (NYSE: UTX) is a major competitor.
The firm pleased investors two weeks ago, when it reported Q4 EPS of 40 cents and revenues of $139.9 million. Analysts had been looking for 39 cents and $126.8 million. Management also guided FY08 EPS to $1.73-$1.76 ($1.74 consensus) and FY08 revenues to $575-$580 million ($561.15M consensus). HEI shares popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys," one "buy" and three "holds." Analysts expect a 19 percent average annual growth rate through the next five years. The HEI Price to Book ratio (3.91), Sales Growth rate (27.41%), Return on Assets (9.48%) and Return on Investment (12.61%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 33 percent of the outstanding shares. Over the past 52 weeks, the stock has traded between $33.76 and $56.92. A stop-loss of $47.35 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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