4-Star Stocks Poised to Pop: AeroVironment
Thu, 04/11/2010 - 00:14 by Brian D. Pacampara
Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, unmanned aerial vehicle (UAV) specialist AeroVironment (Nasdaq: AVAV) has earned a respected four-star ranking.
With that in mind, let's take a closer look at AeroVironment's business and see what CAPS investors are saying about the stock right now.
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|Headquarters (Founded)||Monrovia, Calif. (1971)|
|Market Cap||$529.11 million|
|Industry||Aerospace and defense|
|Trailing-12-Month Revenue||$249.81 million|
Chairman/CEO Timothy Conver
CFO Jikun Kim
|Return on Equity (Average, Past 3 Years)||10.5%|
|Cash/Debt||$157.6 million / $0|
Boeing (NYSE: BA)
Lockheed Martin (NYSE: LMT)
Northrop Grumman (NYSE: NOC)
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 522 members who have rated AeroVironment believe the stock will outperform the S&P 500 going forward. These bulls include chematu and All-StarTMFPlatoish, who is ranked in the top 2% of our community.
Just last month, chematu touched on the pair of tailwinds working in the stock's favor: "[AeroVironment] is in the midst of 2 emerging trends: unmanned aircraft and charging for [electric vehicles]. These product lines have been well received by both public (military security forces) and private sectors (industrial application EVs, and Nissan)."
While AeroVironment has to battle behemoths in each of those businesses, our community thinks the company's potential is too interesting to ignore. Over the next five years, AeroVironment is expected to grow earnings (29% per annum) much faster than giant UAV foes Boeing (10%), Lockheed (8%), and Northrop (11%), as well as gorillas in the EV charger space General Electric (NYSE: GE) (13%) and Eaton (NYSE: ETN) (10.5%).
Despite some likely near-term bumps, CAPS All-Star TMFPlatoish thinks AeroVironment'slong-term remains appealing:
The UAV business accounts for about 90% of sales currently and is in decline as the wars in Iraq and Afghanistan wind down. The EV charger business will take some time to develop further and the competition will undoubtedly be tough. They have formed a partnership with Nissan to be the approved charger vendor for the Leaf and in some sense this gives them first mover status. ... There are also new applications for UAVs being tested (boarder security, homeland security, disaster management, etc.) that should offset some of the declining demand from the battlefield. I'm fully expecting that the stock price might decline further in the near term, but I want to keep my eye on this one and believe it could be a nice long term winner.
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