GR: aerospace boom will go for years.

The type of market volatility is something that has never been seen before within the US markets. Recently, gold and oil have collapsed and are making 5% moves in 4 to 5 hours. It is a trader's paradise. There is so much fear in the market that panic is what most investors are relying on. Even the most stable sectors have been pulled down with the emotion and it looks like most equities are a bit of a bargain, except for some of the financials, which I have no idea how it will pan out. Sectors of safety are good at these times. They get beaten down with the rest of the market but still have the same value going forward. Sectors with a story seem to look good, at least the ones that aren't overblown commodity picks, such as agricultural stocks, which look good long term but may have a massive pullback going forward. Aerospace and defense has seen some downward momentum, but aside from a world wide recession, they should be well placed and defensive in nature for the upcoming years. They also have growth going forward in military and commercial markets. I had wrote recently on Goodrich. This stock is even more of a value now then when I wrote placing it as one of my favorite stocks going forward. It has sector momentum that should go on for years no matter the market. Goodrich has become a much better company over the past few years. They have provided a much more reliable revenue stream through repair and replacement contracts. They have diversified their portfolio of products becoming one of the top providers within their sector. With the reliable revenue, they also have a sustainable leadership within many of the product markets they are in. Their returns have been great and much of this has been due to excellent, top notch products that have provided better revenues and margins. Their balanced growth has decreased their beta and made them a dependable company with respect to investor returns. In 2007 they had $6.4 billion in revenue. Of this revenue a third of it is commercial aftermarket. That means repairs and replacement of parts. 30% of their revenue is from contracts with providing new parts to the likes of Boeing and Airbus. 25% is defense and military. 25% of sales are from Boeing and Airbus, with respect to new planes, 15% is Airbus which looks better for the company as they landed the new military contract with US government for airplanes to refuel fighter jets and bombers so they do not have to land between sorties. Their total active fleet of planes they are servicing is 15,000. This is all reliable revenue and 33% of their sales. This year they plan on another 1100 planes to be delivered increasing not only new sales but potential for repairs. It seems that the increase in plane production could go for years as we have not seen anything near a peak with respect to the industry. 2007 had record new orders of planes. This year will be even better as they plan on booking more planes than delivering, adding to their backlog. Boeing's Dreamliner and Airbus' A350 will also push sales as every international airline will need to update to lower costs and increase sales of tickets. Strong demand will continue through 2011 in both international and regional aircraft. Most of the growth is overseas with many orders for the newer, higher technology planes coming out. Aftermarket demand will increase steadily through 2013 and beyond at a 4% to 5% clip. Also, there is world wide demand for new technology with respect to military purchases. The F-35 and newer helicopters will add to this growth. With respect to commercial sales, world growth is the driver. Even with the airlines in shambles in the United States, there is wonderful growth in emerging markets. This is proven by increased miles and seats with respect to international markets. That has fueled international need for planes on regional and world flights. The CEO of Goodrich stated that he believes that 2011 and 2012 will be the best with respect to their market. In 2005 they delivered 700 units, while in 2011 it looks like the number could rise to almost 1300. Their backlog is very balanced and would not be affected much by contract cancellations. Asia has the largest part of backlog at one-third. Europe is second at a little under a quarter. North America is at 14%. Leasing and the Middle East are each around 10% of demand. 4 out of 5 planes on backlog are in mature markets with little reason for cancellation not matter the world economy. If we look at Goodrich and what they use to supply to the airlines, we find that they are not only supplying more equipment with respect to the newer planes but also more expensive equipment. Their extensive contracts with Airbus will help to push their growth going forward also. As an example the Airbus A320 uses Goodrich aero structures, wheels and brakes, actuation systems, interiors, sensors and integrated systems, engine control and electrical power systems. In 2006, there were 3350 A320's in service, by 2018 this number will swell to over double that. The reason this is so impressive is that Goodrich will realize up to $7 million in revenue for each plane. Airbus has stated that this plane will be on the market for at least another 30 years. Goodrich may have even better areas of growth with respect to their access to military contracts and that is where their focus lies going forward. Of their $1.6 billion in sales last year, almost three-quarters were spent on platforms such as tactical jets, planes, and helicopters. Their payloads are less but have better growth going forward. They have a $3 million contract with respect to F-35 tactical jet fighter. The CH-53K helicopter looks to have $1.5 to $2 million per. Helicopters are 40% of their revenues and they will increase to 55% going forward. Future growth in the ISR market should be large also. It looks as though unmanned aircraft is the way that air force is going. Sales and income overall have increased every quarter from the 4th quarter of 2004. If we look at 2008 there is growth in all channels of their services. The commercial aircraft business is suppose to increase 20% this year. Regional airline purchases are estimated at 13% growth. Their aftermarket growth could be as high as 10% growth. Defense and aerospace will increase around 8%. The other aspects of the business will grow at another 10%. Overall growth looks to be around 13%. Total sales in 2007 were $6.4 billion and that will increase to $7.2 billion this year. EPS is suppose to increase for 2008 as much as 14%. Cash increased by 64% last year and will increase by 75% this year, which could create an increase in share buybacks and dividends. Goodrich has leading market positions and growth in all areas. This will help to continue their growth and lead to increases in margins with respect to aftermarket sales. When looking at organic growth they have increased positions with respect to contracts they already have. Their growing market will lead to more sales of aftermarket parts with respect to the future. New military technologies will also aid to their growth although not to the extent of commercial planes. They are well positioned in sales, margins and organic growth with emphasis on increasing earnings. Buy this stock as it is very inexpensive.