Our first idea today, an aviation services company, beat analysts’ earnings estimates by $0.02 last quarter, and is forecasted to grow at an annual rate of 16.61% over the next five years. Our other two recommendations are to sell two previous ideas whose quarterly earnings disappointed.
Buy: AAR Corp. (AIR)
From Upside
A leading independent provider of aviation services to commercial and government customers, AAR Corp. (AIR) is benefiting from robust aerospace and defense markets. Global air traffic is expected to climb 5% annually over the next 10 years, fueling steady fleet growth.
AAR benefits from exclusive and long-term parts-supply contracts. Solid organic sales growth, fatter profit margins, and an expanding international presence should help lift earnings. AAR’s quarter ends on August 31, with earnings typically announced in late September. Wall Street expects per-share earnings of $0.52 on sales of $495 million. The consensus calls for a 9% profit increase in fiscal 2020 ending May, to $2.57 per share, with revenue up 5%.
Over the next five years, per-share earnings are expected to grow 17% annually. We are starting AAR with a Buy recommendation.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, August 2019