Like many of the top stocks in the various S&P 500 sectors, the quality aerospace and defense names have taken some shots in the recent sell-off. In a new research report, the Aerospace and Defense analyst team at Stifel says flat out there is a solid trading opportunity for investors. While they think that a continued pullback on some of their top names is not out of the question, the Stifel team believes some buying opportunities have arisen ahead of earnings releases over the next several weeks, along with potential for pullbacks on stocks that are still very close to recent and all-time high levels.
Here are some of the top names that are rated as a Buy at Stifel that could provide investors some solid upside.
Boeing Co. (NYSE: BA) shares were up more than 80% last year. And the company recorded better-than-expected orders in the first quarter of 2014, reached a favorable agreement with several of its union locals and announced a change in post-retirement plans for non-union workers. Some perceived weak guidance and a 787 glitch that slowed some deliveries have dropped the shares almost 15%, and the analysts think that this provides a solid entry point. Investors are paid a 2.4% dividend. The Stifel price target is $160. The Thomson/First Call estimate is at $ 152.03. Boeing closed Friday at $122.07 a share.
Curtiss-Wright Corp. (NYSE: CW) is a global innovative company that delivers highly engineered, critical function products and services to the commercial, industrial, defense and energy markets. The company also traces its roots back to the American aviation pioneer the Wright brothers. The February acquisition of the Canadian company NPSI expands the company’s nuclear manufacturing and test operations by providing an enhanced channel to the international fleet of Canadian-designed nuclear power plants. Investors are paid a small 0.9% dividend. Stifel has a $70 price objective, while the consensus target is a touch higher at $71. The stock closed Friday at $59.47.
Hexcel Corp. (NYSE: HXL) is also a stock to buy at Stifel. The company engages in the development, manufacture and marketing of lightweight and high-performance structural materials for use in commercial aerospace, space and defense, and industrial applications. Hexcel is also a major player in the wind turbine industry, which has plateaued in the recent years, but is still an important piece of the green-product portfolio of giants like General Electric. Its Hexply technology, which is used in glass or carbon fiber prepregs, is cutting edge and gives Hexcel a great advantage over its competitors. The Stifel price target is $55, and the consensus figure is posted at $49. Hexcel closed Friday at $40.83. (Correction. Hexcel does not pay a dividend. An earlier version of the story stated that it did)
Triumph Group Inc. (NYSE: TGI) has been bouncing off 52-week lows, and the stock is seeing some solid insider buying. The company designs, engineers, manufactures, repairs and overhauls a broad portfolio of aerostructures, aircraft components, accessories, subassemblies and systems. It announced a shareholder friendly 5 million share repurchase program in February. Investors receive a tiny 0.3% dividend. The Stifel price target is $90, and the consensus number is at a much lower $78.64. Triumph closed Friday at $62.07.
Woodward Inc. (NASDAQ: WWD) rounds out some of the top names in the Stifel trading call. The company is an independent designer, manufacturer and service provider of control system solutions and components for the aerospace and energy markets. The company’s innovative fluid, combustion, electrical and motion control systems help customers offer cleaner, more reliable and more efficient equipment. Investors are paid a small 0.8% dividend. The Stifel price target is $52, and the consensus is at $50.43. Woodward closed Friday at $40.69.
The combination of fleet renewal and aircraft replacement is a key thesis in the Stifel trading call. With many of their top stocks reporting stronger-than-expected first-quarter earnings and bookings, they feel that the strength can carry over not only to the second quarter, but for the rest of the year.