The aerospace industry is on the brink of having the biggest merger in sector history. United Technologies Corporation (UTX - Free Report) recently agreed to combine its aerospace businesses with U.S. contractor Raytheon (RTN - Free Report) to create a new company worth approximately $121 billion. This deal is completely rearranging the competitive landscape for the aerospace industry.
Boeing (BA - Free Report) has also brought some attention to the sector. Boeing’s issues with their 737 MAX and the ongoing trade war rhetoric has also caused people to question how well the aerospace sector is doing. While the industry has gone through some recent hiccups, there still remains some stocks that have been able to grow despite these circumstances. These stocks possess extraordinary growth potential that can catapult them into success. Let’s take a more in-depth look into these stocks within the aerospace market that have potential to develop into real winners.
Heico (HEI - Free Report) is a company that is primarily engaged in certain segments of the aviation, defense, space and electronics industries. Some of the aerospace company’s clients include a majority of the world’s airlines as well as defense and space contractors, amongst others. Heico is currently listed at a Zacks Rank #1 (Strong Buy) with a Style Score of B in Growth. For fiscal 2019, earnings are projected to grow 22.65% year-over-year, while revenue is expected to see an increase of 12.6%. This growth for the current year is expected to spill over into 2020; estimates have the company witnessing a 9.19% increase in earnings with a 7.69% jump in revenue. Additionally, Heico looks to carry on the momentum from its last quarterly EPS surprise of +22.45% with current quarter EPS growth of more than 8%.
Wesco Aircraft Holdings
Wesco Aircraft Holdings (WAIR - Free Report) distributes and provides supply chain management services to the global aerospace industry. The company offers inventory of aerospace parts, including hardware, bearings, and tools, etc. Wesco is currently sitting at a Zacks Rank #2 (Buy) with a Style Score of A in Growth. The aerospace company expects year-over-year earnings growth of 12% on top of revenue growth of 8.5% for fiscal 2019; next fiscal year could see double-digit earnings growth as well. Additionally, Wesco’s lower than industry average P/E ratio of 12.08 and PEG of 1.01 adds to the stock’s appeal, ensuring investors that they are buying a greatly valued stock.
Kratos Defense & Security Solutions
Kratos Defense & Security (KTOS - Free Report) is a specialized national security technology business, providing mission critical products, services and solutions for United States national security interests. The aerospace defense company is currently sitting at a Zacks Rank #3 (Hold) with a Style Score of A in Growth. Kratos is a real stand out in terms of growth, as the Zacks Consensus Estimate is signaling a 250% earnings increase for the current quarter. This growth is expected to continue through the fiscal year; our estimates are calling for a 50% earnings increase with revenues going up 19.3%. Kratos has been able to beat earnings estimates in the past four consecutive quarters, with an average earnings surprise of 154.17%. The company has been able to maintain a steady positive growth rate and our estimates see the company being able to carry this trend into the foreseeable future.
All three stocks have been able to outperform their respective market year-to-date, further distinguishing themselves within the industry.
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