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Tickers in this Article: GR, TXT, ESL, BA
Aerospace shares have had a good run recently, and most of them have reached higher altitudes the past several years. It's hard to avoid wondering just how much altitude these stocks have left. We're going to take a look at three of the lesser-known aerospace names who all look to have a long flight time left.

Airplanes, Helicopters and... Golf Carts?
Textron (NYSE: TXT) is generally perceived as a large conglomerate with four operation units:
1 - Cessna (manufactures light and medium sized aircraft)
2 - Bell Helicopter
3 - Industrial Products (golf carts, turf machinery)
4 - Textron Financial (the captive finance unit)

With the sale of Textron's fastener business in 2006, management focused on the two most profitable businesses, Cessna and Bell. Management's efforts were successful as those two divisions now make up in excess of 80% of the firm's operating profit. Textron looks more like an aerospace company now and less like a conglomerate. (To learn more on these mega-companies, read Conglomerates: Cash Cows Or Corporate Chaos?.)

The company has done a stellar job of building the brands of Cessna and Bell. Over the last 10 years, Cessna has delivered roughly 80% more airplanes than its nearest competitor, and one out of every three rotary-wing aircraft flying is a Bell. Both divisions have sizable backlogs of orders on the books and the company regularly engages in share repurchases.

The risk in Textron is that it could suffer defense appropriation cutbacks on its V-22 Osprey; also, European customers have been opting for the Eurocopter recently. Be that as it may, Textron has about a 50% market share of the $1 billion-per-year golf cart market.

A Trusted Name
Goodrich (NYSE: GR) is one the most trusted names in aircraft critical components. Want to put the brakes on a 747? Goodrich makes the thrust reversers to do it. The company also produces flight critical subsystems for both commercial and military customers. Rather than take the current good times for granted, the company has been making a concerted effort to expand its margins. This effort has resulted in a growth in earnings of 93% over the past year. The company has averaged about 126% earnings growth over the prior three.

Although the defense components make up about 29% of its backlog, GR is not without competition. The company recently lost a bid for Boeing's (NYSE: BA) 787 and Airbus 380 landing gear and sensory equipment. In addition, recent boondoggles at Airbus put the company at risk for further delays for both the A380 and the A350.

In the next five years, there will be tremendous number of aircraft that are going to need maintenance, retrofitting and repair. Goodrich is in an enviable position with its maintenance-repair-overhaul operation. Aircraft is not like automobiles where you can delay maintenance. When TBO (time before overhaul) arrives, you have to do it - period.

Locked On

Compared to our first two companies, Esterline Technologies (NYSE: ESL) is small firm with not quite $1.2 billion in market capitalization. This firm produces highly engineered, critical components and operates in three divisions: Avionics and Controls, Sensors and Systems, and Advanced Materials - serious work.

The company is a "serial acquirer". Recent acquisitions have included Wallop Defense Systems and FR Countermeasures. Esterline's business mix is 40% defense/space, 40% commercial aerospace and 20% industrial applications.

Esterline Technologies is a supplier for niche products where it is either No. 1 or No. 2 in its target market. No single program accounts for more than 5% of its total revenue and the company's balance sheet is in good shape. The downside is that Esterline's revenue/earnings can be quite volatile. (Want to check a company's financials yourself? Start with Breaking Down The Balance Sheet.)

Airspeed and Attitude
In the world of flying, it could be said that everything boils down to airspeed and attitude. The same could said for investing in these firms. Each of these firms is doing well, and from all indications that should continue. Granted, it takes a fair amount of chutzpah to buy on a new high, but the fact is, that is what professionals do. If a stock is making new highs, there is a good reason for it.

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