Government regulation and the cost of airplanes and insurance are a few of the things that worry me about investing in the major airlines. However, I don't think it makes sense to ignore the opportunities associated with what will be a heightened demand for air travel in the longer-term. In fact, one of the best ways to play air travel potential is by investing in companies that make things that go into airplanes. One of those companies is BE Aerospace (Nasdaq:BEAV).

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From a top-down perspective, I like Florida-based BE Aerospace because it makes important things that air travelers would have a lot of trouble flying without, particularly over long distances things like seats. My thinking regarding BE Aerospace is very simplistic: as the population increases in time, I'm betting that demand for travel, planes and, therefore, things like seats will also increase.

The company has been performing well on the earnings front, as shown on July 28 when BEAV released its second-quarter numbers. Excluding items it earned 39 cents, which was a full nickel north of expectations. On the downside, the company's revenue number in the period looked a bit light compared to what analysts had been expecting. However, I think that this will be overshadowed by management's guidance for the year. The release reported that: "2009 net earnings per diluted share are expected to be approximately $1.40 per diluted share."

That's good news for two reasons. First, its three cents better than what the Street had been looking for. It also means that the company trades at a mere 11 times that outlook. I think that's cheap given that the company is expected to grow more than 15% per annum in the next five years.

Insider Buying
The BEAV CFO, Tom McCaffrey, recently bought 1,400 shares indirectly. Now, some may consider that to not be much money for a CFO, particularly since he bought them under $16, but I think the transaction deserves attention. After all, the shares are well off their lows. In addition, some insiders in the past have had a pretty good track record in terms of timing the stock. As well, there was some insider buying when the stock was under $10 earlier in the year, and McCaffrey was one of the buyers.

My Other Top Pick In Air Travel
I think that Boeing (NYSE:BA), which produces commercial aircraft, will prove to be an enormous winner in the future. After all, in addition to more people in this world, and thus potential travelers, airlines will need to update their existing aircraft, which seems to mean that the company will have a nice place for itself well into the future.

Though I may be interested in some of the makers of airplanes, airlines don't intrigue me right now, and nor do I think they will in the near future. Costs, such as insurance and fuel, are too high, and all the rules and regulations these companies have to follow make me hesitant to get involved in this space. On top of that, some of the majors aren't expected to earn too much on the bottom line this year, which is also keeping me parked on the sidelines. For example, Continental (NYSE:CAL) is expected to lose $2.68 in 2009; AMR Corp (NYSE:AMR) is expected to lose $4.52 in 2009; and Delta (NYSE:DAL) is expected to lose $1.27 in '09. This fails to lift my spirits.

Bottom Line
When it comes down to it, I think the demand for air travel will grow in time. And I think the best way to play that may be by investing in a company like BE Aerospace or Boeing. With regard to BE Aerospace, it's coming off a good quarter, trades at a low multiple of expected earnings, and there was some recent insider buying. All of these things perk my interest. (To learn more, see The Industry Handbook: The Airline Industry.)

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Tickers in this Article: BEAV, BA, CAL, DAL, AMR

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