Stock of the Day: BE Aerospace (BEAV)
My Stock of the Day is BE Aerospace (BEAV).
I have been bullish on this stock and owned it for clients for a couple of years. But rather than running its course, I felt the story continued to get better.
Profitability continued to improve; the company paid down huge debt; and it continued to win more and more contracts and grow its backlog. Moreover, the upgrade cycle for airliners is a long-dated cycle, and doesn't run its course overnight.
The stock has been under pressure recently, even though the company reported solid results in its latest quarter, and said its outlook remains very positive. I think that investors are still worried with the potential slowdown in the overall global economy.
Today, the company said it won $200 million worth of contracts from unnamed airlines to refurbish wide-body cabins and put in new first-class suites. These are profitable contracts for them.
The CEO said that these contracts along with continued "robust market conditions" strengthened its expectation for continued growth in their backlog and "superior" earnings growth over the next three years.
And the stock reacted very well, rising 9% today on a big pickup in volume. This is bullish action, and I would be looking to add shares where I didn't already have a full weighting.