The major revenue driver for Precision Castparts (NYSE: PCP) is up in the air, literally. Precision is a major maker of jet engine components, and although only modest growth is expected in the sector, due to moderating demand, PCP will benefit as production ramps-up in FY2010.Therefore, I'm reiterating my Buy rating for Precision Castparts, first recommended on April 20, 2009 at a price of $61.92. If you purchased PCP at that time, you're up a nice 35%.
True, repeated delays and doubts about the first flight date for The Boeing Company's (NYSE: BA) 787 Dreamliner represents a major unknown, but look for PCP to perform well, nonetheless, as airlines both expand and modernize fleets. The First Call FY2009/FY2010 EPS estimates for PCP are $7.24 to $7.60.
Stock Analysis: Precision Castparts is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in PCP now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your PCP position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $32.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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