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Jensen: Wading Into Europe

AerCap Holdings (AER - Get Report) is a Netherlands-based aircraft lessor that I recently added to my portfolio. The company just reported quarterly results that exceeded top- and bottom-line expectations, making this the third straight quarterly beat. The stock is cheap at 7.5x this year's expected earnings. AerCap shares also sell for just less than book value.

The company gets 40% of its revenue from European carriers, and it would naturally benefit from a turn in investment sentiment on the continent. It also gets more than 40% of its revenue from faster-growing regions of Asia, Latin America and the Middle East. The company is well-positioned for the continued long-term demand with regard to increasing air travel, especially in emerging markets.

In addition, more and more airlines are moving to an "asset-light" model. Over the past two decades, the percentage of planes that are leased rather than bought has quadrupled -- but still stands at just around 42%. This trend should continue, and that will benefit disciplined lessors such as AerCap Holdings.
At the time of publication, Jensen was long VOD and AER.

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