Protect Your Portfolio: Heico Should Keep Flying High

Heico Corp. (HEI) broke out to a new all time high following an impressive earnings report.

From Google Finance:

HEICO Corporation, through its subsidiaries, is a manufacturer of Federal Aviation Administration-approved jet engine and aircraft component replacement parts, other than the original equipment manufacturers and their subcontractors. HEICO is also a manufacturer of various types of electronic equipment for the aviation, defense, space, medical, telecommunications and electronics industries. It operates in two business segments: The Flight Support Group and The Electronic Technologies Group. HEICO's Flight Support Group consists of HEICO Aerospace Holdings Corp. (HEICO Aerospace) and its subsidiaries, which accounted for 71% of its net sales during the fiscal year ended October 31, 2006 (fiscal 2006). Its Electronic Technologies Group consists of HEICO Electronic Technologies Corp. and its subsidiaries, which accounted for 29% of its net sales in fiscal 2006. In May 2006, HEICO, through its HEICO Aerospace Holdings Corp. subsidiary, acquired Arger Enterprises, Inc.

FUNDAMENTALS: Heico has not only posted outstanding growth over the past three years (about 30% year over year), but it's done so with consistency from quarter to quarter. While growth is expected to slow just a bit, the company is expected to continue to post very good growth over the next two years of about 20%. Add to that solid net margins and ROE of about 11% and strong management ownership of 30%, and Heico is a company that should keep flying high.

TECHNICAL: After reporting earnings that beat the whisper of .34 cents a share (they reported .35) and boosting its full year outlook, the stock broke out of a six-month base to a new all time high. With today's volume coming in at nearly 4x the daily average, this is a strong breakout. This kind of action typically signals further upside action in the coming weeks. It should be noted that the stock is a thin one (trades just 61K shares a day on average), so it can be volatile at times.

Disclosure: Author has no position in Heico at time of writing.

HEI 1-yr chart: