NYSE:TGI
NYSE:ERJ
NYSE:OA
NYSE:LDOS
NYSE:SPR
This week, we provide top-five ranked VE data for our Aerospace Sector stocks. We take a look at our latest valuation data in light of recent chaos in Washington and yesterday’s big market decline.
VALUATION WATCH: Overvalued stocks now make up 49.25% of our stocks assigned a valuation and 19.01% of those equities are calculated to be overvalued by 20% or more. Nine sectors are calculated to be overvalued.
ValuEngine Index Overview
| Index | Week Open | Friday AM | Change | % Change | YTD |
| DJIA | 24893.69 | 23957.89 | -935.8 | -3.76% | -3.08% |
| NASDAQ | 7419.2 | 7166.68 | -252.52 | -3.40% | 3.81% |
| RUSSELL 2000 | 1585.83 | 1543.87 | -41.96 | -2.65% | 0.54% |
| S&P 500 | 2741.38 | 2643.69 | -97.69 | -3.56% | -1.12% |
ValuEngine Market Overview
| Summary of VE Stock Universe | |
| Stocks Undervalued | 50.75% |
| Stocks Overvalued | 49.25% |
| Stocks Undervalued by 20% | 20.45% |
| Stocks Overvalued by 20% | 19.01% |
ValuEngine Sector Overview
| Sector | Change | MTD | YTD | Valuation | Last 12-MReturn | P/E Ratio |
| Computer and Technology | -1.74% | 1.88% | 4.71% | 18.29% overvalued | 29.22% | 31.49 |
| Aerospace | -1.63% | -1.49% | 0.50% | 16.33% overvalued | 22.51% | 22.56 |
| Medical | -1.49% | 1.87% | 4.06% | 6.66% overvalued | 40.50% | 29.02 |
| Multi-Sector Conglomerates | -2.12% | -2.99% | -3.64% | 6.65% overvalued | 10.29% | 24.71 |
| Industrial Products | -2.21% | -0.22% | -0.47% | 4.04% overvalued | 20.45% | 24.26 |
| Consumer Discretionary | -1.12% | -0.74% | -1.48% | 3.39% overvalued | 17.84% | 26.22 |
| Business Services | -1.91% | 1.19% | 5.42% | 3.33% overvalued | 18.07% | 24.26 |
| Consumer Staples | -0.86% | -0.93% | -3.07% | 2.99% overvalued | 12.55% | 25.32 |
| Utilities | -1.02% | 2.28% | -4.46% | 1.42% overvalued | 2.79% | 22.00 |
| Finance | -1.50% | 0.73% | -0.90% | 1.11% overvalued | 9.97% | 18.00 |
| Transportation | -1.93% | 0.25% | -2.32% | 0.29% undervalued | 21.41% | 22.70 |
| Auto-Tires-Trucks | -2.11% | -1.47% | -4.71% | 0.52% undervalued | 18.72% | 13.63 |
| Construction | -1.82% | 0.11% | -1.13% | 0.67% undervalued | 18.55% | 22.62 |
| Retail-Wholesale | -0.61% | -1.52% | -4.62% | 4.38% undervalued | 15.77% | 23.67 |
| Basic Materials | -1.99% | -0.53% | -0.19% | 6.43% undervalued | 1.81% | 22.92 |
| Oils-Energy | -1.84% | -0.57% | -4.15% | 14.07% undervalued | -0.21% | 25.48 |
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Valuations
With the latest market pullback, we now see an undervalued condition for the first time since the beginning of the month. However, we have seen temporary declines over the past months and in general the markets have shaken off some pretty significant one-day declines.
It remains to be seen whether this recent decline will be a longer-term affair or merely a blip. Investors are unhappy about Trump’s proposed tariff plan and the Chinese response. A trade war will not be in the best interests of the US. In addition, White House staff instability and the ever-looming Russian probe also seem to be giving the bulls pause.
We hear a lot about “certainty” for the markets, and a dislike of instability and chaos. One is hard-pressed to recall an administration with more of both than this one. The just-announced appointment of John Bolton as national security advisor–Trump’s third in fourteen months–may also give investors the jitters. Bolton is the hard-liners’ hard liner.
In addition, one cannot help but notice that the just-passed budget combined with the massive tax cuts will most definitely cause a ballooning of the deficit. In the past, this sort of situation has not ended well and has often led to recession.
Sector Talk–Aerospace
Below, we present the latest data on Aerospace stocks from our Professional Stock Analysis Service. Top- five lists are provided for each category. We applied some basic liquidity criteria–share price greater than $3 and average daily volume in excess of 100k shares.
Top-Five Aerospace Stocks–Short-Term Forecast Returns
| Ticker | Name | Mkt Price | Valuation (%) | Last 12-M Return (%) |
| TGI | TRIUMPH GRP INC | 25.7 | 11.23% | 7.76% |
| ERJ | EMBRAER AIR-ADR | 25.56 | 56.08% | 11.62% |
| OA | ORBITAL ATK INC | 132.29 | 35.36% | 32.90% |
| LDOS | LEIDOS HOLDINGS | 65.98 | 13.75% | 24.80% |
| SPR | SPIRIT AEROSYS | 83.46 | 5.13% | 45.88% |
Top-Five Aerospace Stocks–Momentum
| Ticker | Name | Mkt Price | Valuation (%) | Last 12-M Return (%) |
| BA | BOEING CO | 319.61 | 27.45% | 80.59% |
| AVAV | AEROVIRONMENT | 45.07 | 0.98% | 65.46% |
| KLXI | KLX INC | 69.53 | 7.92% | 58.96% |
| HEI | HEICO CORP | 86.61 | 24.17% | 58.00% |
| TDY | TELEDYNE TECH | 186.13 | 22.63% | 49.90% |
Top-Five Aerospace Stocks–Composite Score
| Ticker | Name | Mkt Price | Valuation (%) | Last 12-M Return (%) |
| SPR | SPIRIT AEROSYS | 83.46 | 5.13% | 45.88% |
| COL | ROCKWELL COLLIN | 134.97 | 9.66% | 38.52% |
| BA | BOEING CO | 319.61 | 27.45% | 80.59% |
| LDOS | LEIDOS HOLDINGS | 65.98 | 13.75% | 24.80% |
| HII | HUNTINGTON INGL | 249.15 | -0.84% | 19.29% |
Top-Five Aerospace Stocks–Most Overvalued
| Ticker | Name | Mkt Price | Valuation (%) | Last 12-M Return (%) |
| ERJ | EMBRAER AIR-ADR | 25.56 | 56.08% | 11.62% |
| WAIR | WESCO AIRCRAFT | 10.05 | 43.08% | -10.27% |
| OA | ORBITAL ATK INC | 132.29 | 35.36% | 32.90% |
| KTOS | KRATOS DEFENSE | 9.32 | 34.08% | 17.97% |
| LLL | L3 TECHNOLOGIES | 200.35 | 30.52% | 18.47% |
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