Think of it as a "Goldilocks stock." In this extremely vulnerable market in which many large-caps remain overvalued and small caps keep getting riskier, taking the middle ground can be a shrewd move. We've found a mid-cap stock that could soar as much as 62% in 2016, even as many analysts call for a bear market.
Spirit AeroSystems announced Wednesday that it was significantly ramping up production of fuselages for Boeing's 737, to meet demand as the Chicago-based giant prepares to hike 737 production to 57 planes per month in 2019. Spirit also makes fuselages for Boeing's 787.
Spirit AeroSystems designs, engineers, and manufactures large commercial aircraft structures around the world. It operates through three divisions: Fuselage Systems, Propulsion Systems and Wing Systems.
With a market capitalization of $5.6 billion, Spirit AeroSystems is a mid-cap and as such, confers greater growth potential than large-caps but less risk than small-caps. As investors get whipsawed by wild, intraday swings in global markets, tech-intensive companies with "must have" products are great "defensive growth" plays.
We especially like Spirit AeroSystems because it boasts quality management and strong cash flows, occupies a robustly growing market, dominates its niche, and isn't overvalued because of investor euphoria.
Spirit AeroSystems' current debt-to-equity ratio is a comparatively low 2.39, compared to 2.91 for aerospace/defense, 3.18 for industrial goods, and 3.2. for all equities. That means the company has the financial wherewithal to increase production, without taking on excessive debt that could come back to haunt the company. Aerospace is a cyclical industry and it's littered with the bleached bones of companies that got overextended during the good times, only to crash when demand slowed.