Stock Tip Tuesday…

Heico Corp a momentum pick ✔

^_THEORY
Momentum Picks 💪

Momentum picks ? What’s this you might you ask.
Well, it’s for the tactical investors who want to take advantage of short-term stock movements. If that sounds like you then listen up !

Methodology
The Momentum Picks are based primarily on two of these factors: Quality and Momentum.

⭐ Momentum: In the classic sense of the term, momentum is an investment approach that favors stocks that have been on an upward trend over the past six and twelve months. It does not only include data on the stock's positive trend over the short (3 months), medium (6 months) and longer term (12 months), a so-called "technical" momentum, but also analysts' revisions to net earnings per share and sales over the short and long term, weighted by the number of shares in issue. This is more "fundamental" momentum.

⭐ Quality: The quality factor favors companies with solid fundamentals, i.e. good profitability, strong balance sheets, low margin volatility, a good track record of earnings releases and good visibility on future results.

^{_{THE PICK}}
Heico Corporation

OK, so here’s my momentum pick for this week Heico Corporation.
This company rarely makes the headlines, unlike Nvidia or Novo Nordisk, but its track record is every bit as extraordinary as theirs. From a small supplier of spare parts for the aeronautics industry, Heico has become a major, well-established player in the aeronautics, aerospace and defense industries, and is also present in the medical, telecommunications and electronics sectors.

Heico designs, produces and distributes niche products and services for airlines, overhaul shops and numerous small companies, as well as military defense and space agencies worldwide, in addition to manufacturers of medical, telecommunications and electronic equipment. In particular, it is the world's largest manufacturer of spare parts for FAA (Federal Aviation Administration) approved jet engines and aircraft components.

Heico operates through two main segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG). The FSG, which accounts for around 50% of sales and 35% of operating income, specializes in the design and manufacture of spare parts for jet engines and other aircraft components. ETG, on the other hand, generates 50% of sales and 65% of operating income, and focuses on the design and manufacture of critical subcomponents for military and space applications.

Exceptional investment case ⚡

With compound annual sales growth of 15% over the past 33 years. It has generated a total shareholder return of 21.2% per annum over the same period. It has leveraged its expertise in reverse engineering and its ability to rapidly obtain Federal Aviation Administration (FAA) approval for its spare parts, giving it an edge over its competitors. Heico has adopted an aggressive pricing strategy, offering spare parts at lower costs than original equipment manufacturers (OEMs), without the associated R&D costs, while maintaining a reasonable margin. As a result, it has become an indispensable supplier for most of its customers. The Mendelson family, which owns the company, holds around 19% of the shares and favors a long-term vision.

To add to this the pandemic has highlighted Heico's resilience and could offer growth opportunities as airlines seek to cut costs, potentially turning to alternative parts supplier.

^_NEWS
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That’s All Folks

Thank you for reading. Like usual. Not financial advice.

We don’t own stock in Heico Corp. Full disclaimer here

Cheers,