Genesis Lease's business is just beginning to take off

Posted Jan 30th 2008 6:30PM by Joseph Lazzaro
Filed under: Stocks to Buy

During periods of sluggish economic activity, spotting segments of growth and commercial opportunity often can make the difference between an adequate return on equity, and a portfolio with decidedly less-impressive results. Further, due to the fact that air traffic growth should outpace global GDP growth in the immediate years ahead, aircraft leasing represents an opportunity, and in this category Genesis Lease is worth a review.

Genesis Lease (NYSE: GLS) is an aircraft-leasing company with worldwide operations and a blue chip list of customers. The company has a 15-year service agreement with General Electric (NYSE: GE) Commercial Aviation Services whereby GECAS will service GLS' leases so that Genesis can concentrate on growing its business.

Analysts like GLS' overall business model, plan to expand its lease fleet of 52 aircraft, favorable sector position, and pricing power. The Reuters F2007/F2008 EPS consensus estimates for GLS are $1.25/$1.39.

The risks? Rising capital costs would hurt GLS' results, as would an inability to refinance debt (no small consideration in today's unpredictable credit markets). Analysts are also watching GLS' aviation fuel costs.

The First Call mean rating for GLS is: Buy. [6 firms.] Mean 2008 target: $25.00. [high: $28, low: $21.]

Stock Analysis: Genesis Lease is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from GLS' shares. Sell / Stop Loss if you were to purchase shares in this company: $8.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: aircraft leasing, business travel, commercial aviation, Genesis Lease, GLS, leisure travel, travel

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Reader Comments (Page 1 of 1)

1-30-2008 @ 7:26PM

JJK said...

Mr. Lazzaro you are right. This will be a $30 stock by the end of this year. It was at 28 and fell for no logical reason. When the smart people figure it out (even at $30 it pays a 6.2% dividend!!!!) it will shoot up. $19 will seem really cheap at that time and many will be looking back asking how they missed this stock.
JJK

1-31-2008 @ 9:55AM

TJ said...

JJK you are wrong. It will be a $40+ stock.

1-31-2008 @ 12:19AM

Roger said...

Ummm... GLS doesn't have aviation fuel costs because they don't operate the actual aircraft, the airline does. Does a rental car company pay for your gas when you rent a car from them? No. So, I don't understand that part of your article.

1-31-2008 @ 6:07PM

JS said...

You are all correct. The stock is at 19.87 as I write this (up 0.87 today). The word is that they are going to report a great quarter, and maybe that has gotton out already to some. In any case, it is going up, up, up, and the dividend is great. That's why 93% is owned by institutions. When the retired folks see that dividend, watch out. Plus Cramer loves this stock. It should be a strong buy.
John S.

1-31-2008 @ 4:16PM

Joe Hastings said...

This is going to be a great stock. It should have been one already but most people got off it when the mortgage problem hit, thinking erronously that somehow that would hurt GLS. NOT SO! Now that everyone realizes that, the stock should get back to where it was last year, around 28-30. Also, some merger talk could push it up even more. Now is the time to get in with the stock just under 20. It actually got to 20.10 late today.
Joe