ValuEngine Weekly: Aerospace Stocks, Valuation Data, and Market Decline

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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