Stephanie Link: Is PCP Ready to Take Off?

NEW YORK (TheStreet) -- Some of the aerospace stocks have stalled recently after a putting up stellar performance last year, including one of my long time favorites - Precision Castparts (PCP). I like it here on the pullback and see a few catalysts to move the shares back up to its highs. The stock was a champ last year, rallying 42%, so it's understandable that there would be profit taking early in the year. But the 6.2% selloff from its January highs sets up well into the upcoming quarter, which will be strong and among the highest organic growth stories in the group.

The company makes complex metal components mainly for the aerospace and power generation industries and operates in three segments - investment castings (32% of total sales), forged products (41% of total sales) and fastener systems (27% of total sales). By end market, aerospace accounts for 65% of total sales, power generation is 20% and "other" general industrial is 15%. The company's products are used in very important areas of the aircraft like the wings, brakes, fuselage, etc. To like PCP you have to be bullish on the aerospace cycle - which I am. This isn't exactly an undiscovered theme but one that I think has legs driven by the replacement cycle story, fuel efficiency and standard changes and the long term growing need from emerging markets. The global fleet is north of 11 years old and the combination of high maintenance costs and fuel efficiency needs, as well as the robust backlogs at the key OEMs (Boeing (BA) and Airbus collectively have 6 years of production in their backlogs) PCP has strong earnings and revenue visibility, especially given its long term structural contracts.

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