AAR Corporation (NYSE: AIR) provides
products and services to the aviation, aerospace and defense industries. The company's aviation supply chain unit sells engine and airframe parts, repairs avionics systems and provides inventory management programs. Other AAR divisions offer airframe maintenance, aircraft modifications, cargo handling systems, and commercial jet sales/leasing services. The US government accounts for about one-third of sales.
The company pleased investors last week, when it reported Q3 EPS of 47 cents and revenues of $376.6 million. The Street had been expecting 46 cents and $337.5 million. Both the earnings and sales totals represented company records.
The stock
popped through 30-day moving average resistance on the news and has since been defining a bullish "flag" consolidation pattern. Stocks 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 seven "strong buys" and two "buys". Analysts expect a 29% growth rate, through the next year. The AIR P/E ratio (15.95), PEG ratio (0.87), Price to Sales ratio (0.79), Sales Growth rate (38.99%) and EPS Growth rate (24.82%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $22.97 and $39.42. A stop-loss of $23.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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