2/2/12 BE Aerospace (BEAV): Consistent growth is likely for many quarters to come

By Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Trader
From Cabot Wealth Advisory 2/2/12

I think it's best to stick with the game plan. You want to either buy a stock ripping out of a multi-week consolidation area on huge volume (possibly on an earnings gap), or look to buy already-established leading stocks during pullbacks or consolidations.

With that in mind, my pick for today is BE Aerospace (BEAV), which is the world's top supplier of commercial aircraft interior products, like seats, LED cabin lighting, kitchens and the like. Sounds mundane, but it's not--one of the reasons I've always liked the aerospace sector is that, when the delivery cycle turns up, there are only a few companies that take all the money. And BE Aerospace is one of those companies.

In terms of the industry, Boeing recently announced it's looking to boost deliveries by a big 24% this year. And new orders for jets remain strong. BE Aerospace recorded $665 million of new orders in the quarter, and its short-term backlog, which should be recognized during the next couple of years, totaled $3.5 billion (up 15% from a year ago), while its longer-term backlog, which will be recognized steadily during the next decade, leapt to $4.4 billion, up 60% from a year ago.

Sales and earnings have been picking up speed. Both should increase in the 20% to 25% range in 2012, and management seems confident that the industry is just beginning a strong new aircraft delivery cycle. Translation: Consistent growth is likely for many quarters to come.

That's why BEAV is so strong—the stock built a multi-month base last year and moved to new highs in January. It then paused for a couple of weeks before thrusting higher again on earnings this week.  It's a reasonably valued stock (19 times trailing earnings) that I think can be a steady winner in the months ahead.

Editor's Note: Mike Cintolo is the editor of Cabot Market Letter, our flagship publication.  Combining top stock picking, market timing and portfolio management, Mike has bested the S&P 500 by about 5% annually during the past five years--a period that encompassed bull, bear and choppy markets. With a new bull market taking hold, now is a great time to get in Mike's program so you can take advantage of the leaders as they lift off.