If there’s one message I’ve been hammering home for the past couple of years, it’s this: Focus your investing efforts on highly rated stocks … with outstanding fundamentals and price momentum … in key sectors experiencing their own powerful, “private” bull markets!
I’ve talked about some of those sectors in previous articles — health care … food and beverage … domestic energy … and the like.
But aerospace is one I continue to focus my research efforts on. Tragedies like what happened in the Ukraine with Malaysian Airlines weigh on all of us, and my sympathies go out to the families of the victims. Let’s hope that justice for the perpetrators is swift, and that the global aviation system can figure out ways to prevent future catastrophes like this one. [Updated after news of this came out.]
What does seem clear to me, though, is that growth in the sector will go on. Indeed, new out of the U.K.’s Farnborough Air Show this week tells me the industry is still going strong.
Never heard of Farnborough? Well, it’s one of the major global gatherings for aircraft manufacturers and airline executives. The week-long event runs every other year at the Farnborough Airport south of London.
|Boeing received several orders at the Farnborough Air Show, including deals for its 787 Dreamliner.|
Companies like Boeing (BA, Weiss Ratings: A-) and Airbus hobnob with their customers there. And in good years, they can announce tens of billions of dollars in orders in just a few days.
So how do things look so far in 2014? Outstanding! The orders are literally pouring in over the transom …
The Irish leasing company Avolon said it would buy six Boeing 787-9s and five 737 Max 9 planes. They have a list price of more than $2 billion (though buyers of multiple planes often get non-public discounts).
Okay Airways in China committed to six 737 Max 8s and four Next Generation 737-800s, worth $980 million.
Hainan Airlines in China announced plans to buy 50 7373 Max 8s in a deal worth $5.1 billion at list price.
Airbus hauled in a $13.8 billion batch of orders for its A333neo from AirAsia Bhd.
Leasing firms are also becoming increasingly important players in the market. They buy planes from manufacturers and lease them out to airlines all over the world, paying out nice dividends from the cash flow that business generates.
All told, we’re talking about tens of billions of dollars in orders that will result in production increases and deliveries over a period of several years to come! As a matter of fact, Airbus and Boeing are so busy these days that they’re delivering 100 passenger planes every month.
You can profit from this trend in any number of ways. One of the simplest is to buy an exchange traded fund like the PowerShares Aerospace & Defense Portfolio (PPA). It owns companies like Boeing, jet engine maker United Technologies (UTX, Weiss Ratings: B+), and defense contractors like Lockheed Martin (LMT, Weiss Ratings: A-), and it has risen almost 26 percent in value over the past year.
But I like to drill down into these sectors and get my hands dirty finding the best of the best. I’m talking about the companies that offer the ideal combination of solid yields, great business prospects, high grades from the Weiss Ratings, and serious growth potential.
One of my top aerospace picks fits the bill, and you can get all the details in my new report “Six Mega Market Winners for 2014 — and Beyond!“. This company yields two full percentage points more than a 10-year Treasury. Its fleet is almost completely leased up. And it’s poised to grow substantially over the next few years.
I urge you to consider giving my “Six Winners” report a look by clicking here or calling us at 1-800-393-0189. Because while the Farnborough show is wrapping up, the aerospace boom sure as heck isn’t!
Until next time,