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Recently on CNBC television show "Mad Money," Jim Cramer issued a “Buy, Buy, Buy” recommendation on aerospace company Hexcel Corporation (NYSE:HXL). I don’t normally follow Cramer’s recommendations and haven’t actually watched the television show for several years. Cramer has had some great recommendations over the years but his investing style does not match mine and the stocks he mentions are usually two expensive (price wise) for me as a small investor to get behind. I did some follow up research on Hexcel the past few days and have to say that I think Cramer is right about Hexcel and I have to agree that the stock is a buy.

Hexcel Corporation is a leader in aerospace parts, which is according to Cramer in a bullish seven year cycle right now with the success of Airbus and Boeing (NYSE:BA) launching new large commercial aircraft, which use Hexcel parts. Cramer credited the huge backlog of planes being built by Boeing and Airbus as a main contributor to Hexcel having their most successful year ever in 2011 and their likely great upcoming 2012. Right now fourteen percent of planes in the air have Hexcel products built on them and Cramer thinks that number could be forty four percent by 2017. Cramer called the stock cheap with a price earnings ratio of 18 and a growth rate of 11%.

After Cramer’s comments I dug deeper into this company that was founded in 1946. Hexcel product line is vast and found in so many different industries it amazed me this was the first time I had heard of the company. The company has products on planes, space shuttles, satellites, wind turbines, automobiles, bicycles, skis, snowboards, golf clubs, fishing rods, surfboards, and tennis rackets.

In automobiles, Hexcel products and carbon fiber manufactured by the company can be found in items like the car spoiler, car doors, roof, air intake, dashboard, steering wheel, and the engine frame. The automobile market is not currently a large one for Hexcel but as the government pushes legislation for cars to get higher miles per gallon ratio, car manufacturers will be doing everything they can to make their cars lightweight, which is where Hexcel’s products come in. I think automobile manufacturing could in the future be as large for Hexcel as commercial aircraft currently is and would pay off huge in the long term for the company and for shareholders.

The recent launch of the long awaited Boeing 787 Dreamliner is a big positive for Hexcel. The company makes composite products that are present in window frames and doors of the planes and each plane is responsible for over $1.5 million in revenue for Hexcel. Boeing was three years off of its initial targeted delivery date of the first Dreamliner but now appears to be on track. Boeing is targeting a rate of 10 Dreamliners a month to be manufactured by the end of 2013. Over 3,300 total Dreamliners are expected to be sold by Boeing through 2028 according to Boeing. Over the next 16 years Hexcel could earn close to $5 billion just from Dreamliner sales. The ten per month puts Dreamliner revenue at $180 million in annual revenue for Hexcel by 2014.

Along with Boeing 787 Dreamliner, Hexcel products can be found on two other large commercial planes launched by Airbus. The a380 and a350 from Airbus rely on materials made by Hexcel to keep their large planes lightweight. The late launch of the Dreamliner has been Airbus’s gain as several large airline companies have booked orders with them rather than waiting on Boeing to deliver product. Hexcel is in a great position as they make parts for both and as long as both companies have large backlogs, which they currently do, Hexcel will be making money.

In the marine industry Hexcel has manufactured products for 40 years. Hexcel products are found in hulls, decks, keels, rudders, mast, and sails.

The rail industry has been blessed with Hexcel products for the last 30 years. Items like the floors, doors, and ceilings of train cars have featured products made by Hexcel to help reduce weight. As trains work on reaching higher speeds they increasingly rely on Hexcel to provide lightweight carbon fiber.

The wind segment has not been as strong of a growing market as it once was for Hexcel. Vestas is the number one customer of wind energy products by Hexcel. If an increase in wind energy initiatives comes to be again it will be Hexcel who will benefit with its carbon fiber wind turbines.

The 2010 annual report put out by Hexcel showed a gross margin of 24.1%, which was an increase from 2009’s 22.4% and also 2008’s 21.8%. Hexcel’s healthy gross margins have helped to contribute to the increase in earnings per share and also helped the company recognize over $77 million in free cash flow for 2010. The company chose to pay off a portion of its debt with free cash flow and now has a manageable $215 in long term debt, which is its lowest amount since 1996. As the company pays off its debt and keeps increasing free cash flow, an acquisition or dividend would not be out of the question.

In the most recent reported third quarter, net income doubled on a twenty percent increase in revenue. Analysts’ were expected earnings of $0.27 and Hexcel reported earnings per share of $0.34 instead beating the numbers by 26%. The earnings beat represented the third straight quarter beat and an amazing seven out of the last eight released earnings per share numbers besting analysts’ targets.

For the current fiscal year analysts’ are estimating earnings per share to come in at $1.23 of which $0.91 has already been reported over the last three quarters. Hexcel raised its own guidance recently and stated they expect to report earnings of $1.18 to $1.23. They previously had forecast a range of $1.05 to $1.12.

Next fiscal year analysts’ are hoping for $1.38 per share in reported earnings. Hexcel recently listed its own earnings goal of $1.33 to $1.45 for fiscal 2012. When attempting to look at what shares should trade at it is important to look at next year’s earnings as fiscal 2011 is in the last quarter for the company. Shares trade at 18.6 times this year’s earnings estimates. When applying the same ratio to next years’ mid range $1.39 a share price of $25.84 but part of that may be priced into the stock. I think shares should trade at about eighteen times next year’s high earnings estimates which would put fair value at $26.10. This only implies the shares being undervalued by 12% but I believe this is on the conservative end and think shares will hit $30 by the end of 2012.

The stock is trading at $22.95 at the time of writing representing a market capitalization of $2.26 billion. Shares have traded in a range of $17.33 to $26.48 over the last fifty two weeks placing shares about thirteen percent off of their highest price of the last year. Sitting on its current balance sheet is $48 million in cash and a manageable $249 million in debt (Yahoo Finance). Shares traded as high as $35 in 1988. The company traded for less than $5 between 2002 and 2004 and then steadily climbed from $7 to $25 per shares in a two year span beginning in 2007. The company re-emerged from bankruptcy in 1995 after voluntarily declaring Chapter 11 in 1993.

Hexcel has a large mutual fund holding percentage with 91% of shares currently owned by institutional. The three largest holders are T. Rowe Price (NASDAQ:TROW), Lord Abbett, and Vanguard with stakes of 6.36%, 6.16%, and 4.74% respectively. The stock is a large holding of First Trust Clean Edge Green Energy Index ETF (NASDAQ:QCLN) with the company being the fifth largest holding with 4.8% of funds invested in Hexcel.

It was Hexcel who was present when John Glenn orbited Earth for the first time with products on the Friendship VII capsule manufactured by the company in the 1960s. In 1969, before Neil Armstrong took his first steps on the moon, the foot pads of Apollo 11, made by Hexcel landed first.

I have to thank Jim Cramer for once for bringing this amazing company into my investing watch list. As we round out the year I will consider buying shares for myself and also making the company one of my top ten stock picks for 2012 if the price is right. I think a range of $22 to $23 is a great time to get behind shares of Hexcel.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HXL over the next 72 hours.

Source: A Deeper Look At Cramer-Recommended Hexcel Corporation