Sunday, November 9, 2014

"The Dow Jones is at 17,500 but nobody is cheering like it's a grand bull market. Many a company here has been taken out by an earnings report landmine. Better to stick with a company with a backlog of business like Air Lease Corporation (Symbol AL)"

Dow Jones Industrial Average  17,390.52 - Week Ending 10-30-2014
Dow Jones Industrial Average  17,574.00 - Week Ending 11-07-2014

With the Dow Jones Industrial Average near all time highs you would think that people would be jumping for joy. But many a growth stock has sustained serious damage with revenues beating expectations  but earnings missing sometimes by just a few cents and taking down stock prices by high percentages.

So one way to give yourself a margin of safety is to invest in a company that has a large backlog of business. 

One such company is:

AIR LEASE Corporation , (Symbol AL, $37.60). Air Lease Corp. leases jetliners to just about every carrier in the world. Their main business is providing airlines worldwide with operating leases on new aircraft delivering from direct orders with Boeing, Airbus, Embraer, and ATR. The leases offer customized, creative and flexible leasing structures. 

They also offer sale/lease-back transactions and provide lease expertise to third parties.They also purchase, sell, and remarket aircraft with airlines, manufacturers, financial institutions, and investors worldwide.

As of May 2014, Air Lease had a fleet of 200 aircraft with another 327 aircraft scheduled for delivery over the next 10 years. 

With the current lease backlog of $6.2 billion for 200 aircraft, it is likely that the backlog will nearly double over the next five years with the delivery of another 145 aircraft.

Here are some of the details. The PEG Ratio is 0.414 and the Return on Equity of 9.49%. The PE ratio is 16.58. 

Earnings per share for 2014 will be $2.32 per share and for 2015 it is projected at $2.76.
The dividend yield is 0.43%
The company did $1 Billion dollars in Revenues and has a 23.83% profit margin.

The IBD Rating on Air Lease Corp is 84-95-75.
I love that fat earnings growth number.(It is the middle number in the IBD rating).

Analyst have 11 Buy ratings on the stock and 2 hold ratings.

The stock returns for the company have been very respectable and are as follows:

    YTD Return 21.26%    1 Year Return 25.12% and  3 Year Return is 65.48%

I would say that you can go ahead and purchase Air Lease (AL) right here or on any price correction. 

Men with Briefcases. (Mr. & Mrs. Lloyd George, Winston Churchill, Mr. Clarke)

Leasing Airplanes is a good business and should continue to be a good business.

Have a great week and I hope your football team wins.


No comments:

Post a Comment