Best of the Week
Most Popular
1. Trumponomics Stock Market 2018 - The Manchurian President (1/2) - Nadeem_Walayat
2.Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - Dan_Amerman
3.China is Now Officially at War With the US and Japan - Graham_Summers
4.Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18 - Plunger
5.Stock Market Longer-Term Charts Show Incredible Potential - Chris_Vermeulen
6.U.S. Stock Market Cycles Update - Jim_Curry
7.Another Stock Market Drop Next Week? - Brad_Gudgeon
8.The Death of the US Real Estate Dream - Harry_Dent
9.Gold Market Signal vs. Noise - Jordan_Roy_Byrne
10.The Fonzie–Ponzi Theory of Government Debt: An Update - F_F_Wiley
Last 7 days
Moving Averages Help You Define Market Trend – Here’s How - 14th Aug 18
It's Time for A New Economic Strategy in Turkey - 14th Aug 18
Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - 14th Aug 18
Dow Stock Market Trend Forecast 2018 - Video - 13th Aug 18
Stock Market Downtrend to Continue? - 13th Aug 18
More Signs That the Stock Market Will Rally Until 2019 - 13th Aug 18
New Stock Market Correction Underway - 13th Aug 18
Talk Cold Turkey Economic Crisis - 13th Aug 18
Which UK Best Theme Park - Alton Towers vs Thorpe Park vs Lego Land vs Chessington World - 12th Aug 18
USD is Rising. What this Means for Currencies and Stocks - 12th Aug 18
Hardest US Housing Market Places to Live - Look Out Middle Class - 12th Aug 18
America’s Suburbs Are Making a Comeback - 12th Aug 18
Stock Market US Presidential Cycle, Seasonal Analysis and Economy - Video - 12th Aug 18
Yield Curve Inversion and the Stock Market - Video - 11th Aug 18
Land Rover Discovery Sport 1st Dealer Oil Change Service - What to Expect - 11th Aug 18
How to Setup Webinars and Use Them to Overcome the Barriers in E-Learning - 11th Aug 18
Big US Stocks’ Q2’18 Fundamentals - 11th Aug 18
Dow Stock Market Trend Forecast 2018 - 10th Aug 18
SPX Testing Its First Support Level - 10th Aug 18
Dreaming of a "Comfortable Retirement" on a Public Pension? - 10th Aug 18
The Forrest Gump of All Future Democrat Election Losses - 10th Aug 18
More Uncertainty as Stocks Got Closer to January Record High - 10th Aug 18
Gold and Silver Kill Zone - 9th Aug 18
Even More Cracks in the Gold Dam - 9th Aug 18
Ignore the Stock Market “midterm election year”, Which is “supposed” to be Weak - 9th Aug 18
Stock Market Trend and Volatility Analysis - Video - 9th Aug 18
Tips on Maximizing Small Serviced Offices Space - 9th Aug 18
VIX’s Collapse is Bullish for VIX and the Stock Market - 9th Aug 18
Vestles Platform Offers Several Key Trading Tools - 8th Aug 18
US Stock Markets Higher Until November 2018 - Part 2 - 8th Aug 18
US Stock Markets Higher Until November 2018 - Part 1 - 8th Aug 18
Stock Market US Presidential Cycle and Seasonal Analysis - 8th Aug 18
Is the Stock Market Correction Over? - 7th Aug 18
Yield Curve Inversion and the Stock Market - 7th Aug 18
Stock Market Elliott Wave Analysis and Forecast - Video - 7th Aug 18
Trade War! Win the Economic Hostilities Against the Chinese - 7th Aug 18
Technical Analyst Sees Silver as 'Oversold' - 7th Aug 18
Alex Jones Banned! Will Unapproved Opinions Be Censored Off the Internet? - 7th Aug 18
Gold and Silver Stocks On the Verge of the Next Major Decline - 7th Aug 18
First Time Buyers Need to ‘boost the affordability’ of Their Move Alone  - 7th Aug 18
Long Term Care Homes as an Investment are Heating Up! - 7th Aug 18
The Exponential Inflationary Stocks Bull Market - Video - 6th Aug 18
Land Rover Discovery Sport Oil Change Service Dash Warning Message - 6th Aug 18
Restructuring of Western Economic Power - 6th Aug 18
Stock Market Trend and Volatility Analysis - 6th Aug 18
Stock Market and Economy False Narratives That are Just Wrong - 6th Aug 18
VPN – Is It Worth It? - 6th Aug 18
All You Need to Know About Umbrella Companies - 6th Aug 18
Why China Lost the Trade War Before it Even Began - SSEC Stocks Index - Video - 5th Aug 18
Dow Stock Market Elliott Wave Analysis - 5th Aug 18
Iran's Rial Currency Is In A Death Spiral, Again - 5th Aug 18
IMF Produces Another Bogus Venezuela Inflation Forecast - 5th Aug 18
Gold & Silver Precious Metals Monthly Charts - 5th Aug 18
Time to Position for a Decade-Long Bull Market in Natural Resources - 5th Aug 18

Market Oracle FREE Newsletter

Trading Any Market

Where to Invest the Next Time Your Flight Gets Delayed

Companies / Sector Analysis Mar 25, 2015 - 10:30 AM GMT

By: Money_Morning

Companies

Michael A. Robinson writes: It’s been a few weeks, but I’m sure you recall the tale of American Airlines Flight 382.

On Feb. 28, the routine commuter flight was scheduled to fly from Dallas to Oklahoma City – usually an hour-long trip.

However, bad weather and mechanical problems combined to leave passengers stranded on the plane for nine grueling hours.


I’m sure you’ve been in a similar situation – if not so long. I know I have.

With these seemingly innumerable flight delays and the overall aggravation of commercial air travel, it’s no surprise that many top corporate executives are taking to the skies in private jets.

According to a recent Federal Aviation Administration report, the business aviation market grew 3.54% in 2014. To put that in perspective, it grew 46% faster than the U.S. economy.

That’s why today I want to share with you a rare tech investing “double play.”

This one takes advantage of the private jet boom – it’s a growth spurt that I think will last at least a decade…

Ready for Takeoff

You likely know that sales of commercial jet airliners remain robust.

Just look at Airbus Group NV (OTC: EADSY). Last year, the French company booked 1,456 new orders, bringing Airbus’s backlog of orders to nearly $920 billion.

And the Chicago-based Boeing Co. (NYSE: BA) is in a similar excellent position. Last year, it set a company record with 1,432 new jet orders for the year, compared with the 1,355 it received in 2013.

Airbus and Boeing are riding the tailwinds that come from higher demand for air travel, itself brought on by the continued global urbanization.

Take a look at Shenzhen, China. In 1979, this was a sleepy town of 30,000 people. By 2010, that figure had climbed to 12 million.

Then there’s Karachi, Pakistan, where the population in the same period is up 80% to 20.9 million – bigger than the cities of New York, Los Angeles, Chicago, Houston and Philadelphia combined.

No wonder, so many U.S. companies are flying overseas – literally millions of new customers are waiting in the wings.

Of course, technology like Skype, email and video conferencing have made international business easier than ever. But sooner or later, executives must go see these overseas markets firsthand.

As I like to remind folks, you can’t build an overseas production plant with a phone.

That’s why top corporations and their executives find it often makes more sense to pay $25 million or more for a private jet and avoid flying commercial.

The best data I’ve seen on the financial impact of flight delays comes from a 2010 report from University of California, Berkeley. The UC Berkeley researchers found that delays cost the U.S. economy $32.9 billion a year.

And about half of that cost is borne by us – passengers.

When Spending Makes Sense

For a CEO making millions of dollars a year, a few hours of delays each month add up fast for the executive, his or her company and shareholders.

No wonder Honeywell Inc. (NYSE: HON) projects a business aviation boom over the next decade. According to Honeywell’s recent survey of corporate jet buyers, business jet sales will rise 4% a year through 2024, 22.5% higher than average U.S. gross domestic product (GDP) growth over the last six decades.

Honeywell is projecting up to 9,450 deliveries of business jets, valued at $280 billion, through 2024. Corporate buyers plan to replace 23% of their fleets with new jets just in the next five years.

Honeywell says that North America will account for about 59% of that growth. Europe and Latin America are roughly equal, accounting for 18% and 17% of the business aviation industry’s expansion.

Some 29% of respondents in the BRIC countries (Brazil, Russia, India and China) told Honeywell they’re planning to buy business jets. That means the demand for private jets is 25% higher in developing economies than in the world as a whole.

The diversified global tech company also found that buyers want larger planes because they have bigger cabins, longer ranges and more advanced technology.

Definitions of the various classes in this group are a bit fuzzy. But generally, we’re talking about aircraft that can fly from New York to Hong Kong, with eight or more passengers, and cost between $25 million and $65 million.

This is a market that Honeywell knows backward and forward… and it’s why it’s the first part of today’s private jet “double play.”

Two for One

This Morristown, N.J.-based firm is a major supplier to the business aviation market. And its customers include both Airbus and Boeing.

Honeywell makes jet engines, cockpit displays and systems for flight management, communications and navigation.

If you read my Feb. 13 column on the company, you already know that I’m big believer in Honeywell – which is also produces consumer and business products such as thermostats and offers engineering services. Its position as a play on business jets is yet another good reason to buy the stock.

The company doesn’t project sales for the segment but says business aviation remains integral to its strategic plan through 2018. That program calls for a series of acquisitions of up to $10 billion designed to add about $5 billion to $8 billion in sales over the next five years.

For the fourth quarter, Honeywell reported adjusted earnings of $1.43 a share, a 15% increase from the year-ago quarter on basically flat sales I believe the stock will continue to benefit from the firm’s improved efficiencies with higher earnings per share.

So, even if revenues remain flat this year because of the strong dollar’s effect on overseas sales, the stock still stands to gain.

Honeywell also is a supplier to one of the world’s top makers of business jets – Gulfstream Aerospace Corp.

Gulfstream, of course, is synonymous with business aviation. It set the standard back in 1958 when it launched the Gulfstream I, the world’s first true business aircraft.

In February, its new flagship jet, the 18-passenger Gulfstream G650ER, made a one-stop flight around the world, setting several speed records along the way.

Leaving White Plains, N.Y., it flew nearly 7,000 nautical miles to Beijing in 13 hours and 20 minutes. Flying east from Beijing to its Gulfstream’s home city of Savannah, Ga., took just 12 hours.

Today, Gulfstream is a wholly owned subsidiary of defense leader General Dynamics Corp. (NYSE: GD) – the second part of our private jet “double play.”

And Gulfstream is a big winner for GD.

In last year’s fourth quarter, Gulfstream said it had its best revenues in three years, though it didn’t release sales figures. The unit’s strong performance helped General Dynamics beat forecasts during the period.

General Dynamics reported earnings per share on continuing operations of $2.19, compared with the Thomson Reuters forecast of $2.13. On an adjusted basis, it had per-share earnings of $2.09, up more than 49% from $1.40 in the year-ago period.

Like Honeywell, General Dynamics is that it also gives us a play on defense and information technology.

The firm supplies the Pentagon with everything from surface ships and submarines to land vehicles and weapons systems to reconnaissance, surveillance and cyber security.

With a market cap of $44.51 billion, the stock is trading around $136 a share and is a great performer.

Over the past two years, it has returned 96% to investors. That’s 174.3% better than the S&P 500′s return over the period.

Thus, Honeywell and General Dynamics give us one of those rare investment “double plays” – two ways to build your wealth, this time by cashing in on the growth in business aviation.

So, the next time you find yourself stuck at the airport or on the tarmac, don’t get angry…

Instead, invest in these two companies that are riding the business jet boom to new heights.

Source :http://strategictechinvestor.com/2015/03/invest-next-time-flight-gets-delayed/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules