TAT's Solid Growth Expected to Continue

| About: TAT Technologies (TATT)
TAT Technologies Ltd. (NASDAQ:TATTF) is one company that offers economic value, and probably a lot more that is apparent. If TAT had a dividend reinvestment plan, anyone who bought this stock when I did back in 2003 at $4 a share, now has stock worth $23.50 a share, or has recorded a 487% profit within three and a quarter years. It may not be another Silicom Ltd. (NASDAQ:SILC), or NDS Group plc (NNDS), but just remember how investors looked at TAT before 2003 and compare that with the way they view it today.

My claim about the economic value that the stock represents even after these gains is based on the following assumptions. Earlier this week, TAT filed a draft prospectus for the flotation on Nasdaq of its U.S. subsidiary LIMCO Airepair Inc, which will managed by the underwriters Oppenheimer & Co and Stifel Nicolaus, both of which are more than capable of leading an offering like this. TAT wishes to raise $45 million for the Oklahoma-based LIMCO (which wholly owns Piedmont Aviation Component Services) at a value of $100 million before money. Should the flotation be successful, (which, as experience has shown, is not always the case), then TAT, which is now worth a total of $122 million, will have potentially phenomenal value.

The online news site Bellwether Report is fast establishing itself globally as a site that many use as source for investment information. At the end of March, it published an extremely complementary review on TAT. "TAT Technologies helps militaries keep their cool; in the Middle East that's no small thing," wrote the site's aviation industry analyst. He was, of course, speaking in a jocular vein, but he really liked what he saw in TAT and rated it "Buy" due to the stock's fall to $20 from $26 on the eve of the publication of the company's report for the fourth quarter of 2006 and the year as a whole which, incidentally, were excellent.

Assuming that the flotation does go ahead (since it's not dreams we're talking about here, but a very healthy reality), even at a lower value of $80 million, TAT's current price is most definitely economic. I believe that TAT is operating in a rapidly growing field, and when I say this I refer to its heat and cooling systems as well as its aviation component supply and upgrading business. The company has a competent and experienced management, it is under the constant supervision of First Israel Mezzanine Investors Fund, and it is operating in a growing field. So what more could you ask for? It has even paid out a handsome dividend.

TATTF 1-yr chart


Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.