It doesn't have the healthcare or other non-aerospace revenue that Heico has - it generates about 65% of its sales from commercial and the rest tied to defense. TransDigm does have a few potential worries that make Heico a better buy right now. Add it all up and Heico, though sure to take a hit from the pandemic, looks like the " cleanest dirty sheet" in commercial aerospace. It seems likely those sales will begin to rebound as soon as airlines start restoring flights and should recover much faster than new plane sales do. Low oil prices make that decision easier since much of the cost benefit to a new jet is its fuel efficiency.Īftermarket sales accounted for 54% of Heico's total 2019 flight support revenue, and repair and overhaul services accounted for another 24%. When airlines do eventually ramp up operations again, they are likely to do it with jets already in their fleets instead of committing to expensive new airplane purchases. However, Heico's commercial aerospace business looks like a good bet to recover faster than Boeing due to its emphasis on aftermarket sales of replacement parts instead of new planes. Heico's certainly going to take a hit as airlines downsize, and some of that defense and non-aerospace revenue could tail off in the event of a recession, or if the government cuts Pentagon spending to help pay for emergency economic stimulus. The company could also see supply-chain disruptions if a second wave of COVID-19 causes new closures of nonessential businesses and stay-at-home mandates. Its defense business has held up well of late, and with the Pentagon committed to keeping supply chains up and running, it shouldn't see the sort of falloff in demand that the company's commercial The company makes parts that go into medical equipment such as ventilators, X-ray systems, sterilization equipment, and personal protective equipment. Heico ( NYSE:HEI) is best known as a maker of aerospace avionics, components, and spare parts, but it derives about half of its revenue from activities outside of the commercial aerospace sector. Heico: Diversification will help it recover quicker Here are three commercial aerospace-focused companies worthy of your consideration today.
But for those with a long enough time horizon who want to buy into their sector while prices are low, there are options. Boeing predicts it will take years before aircraft demand recovers, so it's bringing down production rates.Įven after those steep share price declines, I can't recommend buying Boeing or Airbus right now. That means fewer planes in the air, fewer spare parts needed, and ultimately fewer new jets ordered for the foreseeable future.Īs a result, shares of leading plane manufacturers Boeing ( NYSE:BA) and Airbus ( OTC:EADSY) have lost more than half of their value so far in 2020, and their suppliers have not done much better.
Xcalibur aerospace free#
When not arguing on Twitter or writing about the markets, Lou spends his free time out in nature, complaining online about the Baltimore Orioles or Watford FC, or listening to early 1990s alt rock.įollow commercial aerospace sector has been hit hard by the COVID-19 pandemic, with airlines that just a few months ago were in expansion mode now doing everything they can to cut costs and raise liquidity. He spends a lot of time these days focused on the industrials and financials. Lou has followed the markets for more than two decades, developing extensive contacts including industry leaders, consultants, regulators, and labor representatives.
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