AerCap Holdings (AER)
By Timothy Lutts, Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 8/25/14 Sign up for Cabot Wealth Advisory—it's free!
It’s no secret that airline stocks are doing well in this improving economy. JetBlue (JBLU), Southwest (LUV) and Spirit Airlines (SAVE)are all flying high (I couldn’t resist).
The trouble with airline stocks, however, is that they can turn cold in the blink of an eye.
So I think your odds are better in a stock like AerCap Holdings (AER), which is still benefiting from the same industry trends but might not see such an exodus when the going gets rough, simply because it’s less well known and thus owned by savvier investors.
AerCap is the world’s largest aircraft leasing company, with more than 1,700 aircraft leased to more than 200 customers in more than 90 countries.
Headquartered in the Netherlands, the company is truly a global business, with 22% of revenues coming from Europe, 17% from the U.S., 11% from South America, 10% from Russia, 8% from China and 32% from elsewhere.
And AerCap has just gotten larger, with the $7.6 acquisition of International Lease Finance Corporation (ILFC), the last major asset to be sold by American International Group.
This acquisition gains the company ILFC’s $21 billion backlog, full of 787 Dreamliners and Airbus 350s at below-market prices, so if the industry remains healthy, this could work out really well.
So you could just run out and buy AER here.
But I don’t recommend it, simply because technically, this is not a prime setup. If you want today’s prime setups, the best place to get them is Cabot Top Ten Trader, which every Monday recommends 10 stocks that are ready to run.
Cabot Top Ten Trader first recommended AerCap (AER) on Feb 24 of this year when it was trading at 42. Today it’s at 49. Tomorrow, who knows?
So take a look at Cabot Top Ten Trader and try to get in on the next AerCap!
Click here for all the details.
From Cabot Wealth Advisory 4/22/14 Sign up for Cabot Wealth Advisory—it's free!
My stock pick today is AerCap Holdings (AER), a Dutch company that leases aircraft and aircraft engines to commercial passenger airlines and cargo haulers. The company has a fleet of 378 aircraft, making it one of the largest leasing and finance companies in the aviation world.
But if big is good, enormous is better, and AerCap is in the process of taking over International Lease Finance Corp. (ILFC) from AIG in a $5 billion deal. The merged company will have a fleet of nearly 1,400 planes, creating an instant rival for Gegas (GE Capital Aviation Services), whose 1,630 planes will remain the largest in the world, at least for now. Along with ILFC’s planes, AerCap will acquire the company’s early orders for Boeing 787s and Airbus A320s and A350s. When all 385 planes now on order are delivered, AerCap will own the crown as the largest aircraft leaser in the world.
Here’s a chart showing the performance of AER against the S&P 500 Index over the last two years. This shows the potential advantages of individual stock ownership compared to an index. You may say that I’ve cherry-picked an especially successful stock to make my point, but that is exactly my point. If you want to beat an index, of course you look for uncommonly strong stocks to own. That’s the way it works.
You can learn more about Cabot Top Ten Trader and additional stock 10 momentum stocks that Mike recommended this week by clicking here.
AER was recently a featured stock in Cabot Top Ten Trader, which comes out every Monday and details the strongest stocks in the market.
|AerCap Holdings N.V. (AER)
AerCap House, Stationsplein 965
Schiphol, 1117 CE, Netherlands
31 20 655 9655
|Index Membership: N/A
Industry: Rental & Leasing Services
Full Time Employees: 163
4/22/14 AerCap Holdings (AER): An uncommonly strong stock