With Goodrich Corp., the profits are now literally up in the air

Posted Feb 6th 2008 5:56PM by Joseph Lazzaro
Filed under: Stocks to Buy

Readers of this space know that the investment bias is toward large-cap companies who have a competitive advantage in established markets, preferably with a favorable global trend as a support. With this in mind, Goodrich Corp. is worth a review.

Goodrich Corp. (NYSE: GR), formerly a tire maker (the company without the blimp), is now an aerospace services company, providing both parts and service for engines, airframes, electronic systems, and other aircraft systems.

Analysts see double-digit revenue growth for GR in 2008 and 2009, aided by favorable sector trends, including strong international, cyclical demand for jets and increased jet use, and an aging jet fleet in the U.S.

Further, GR is also using strong cash flow to expand maintenance, repair and overhaul facilities.

Analysts also like the fact that GR is moving manufacturing to low-cost areas and implementing efficiency projects. The Reuters F2008/F2009 EPS consensus estimates for GR are $4.34/$4.95.

The risks? Analysts are keeping an eye on GR's core component / raw material costs. A sustained global economic slowdown would also hurt GR's results.

The First Call mean rating for GR is: Buy [21 firms]. Mean 2008 target: $80 [high: $86, low: $73].

Stock Analysis: Goodrich Corp. is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from GR's shares. Sell / Stop Loss if you were to purchase shares in this company: $38.

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: aerospace, aerospace services, commercial aviation, Goodrich, GR, jets