Titanium Metals Corporation: In For the Long Haul

Jun.15.07 | About: Precision Castparts (PCP)

Echo To All submits: Apparently Lenny Dystra beat me to the punch, but I did not share his sentiment until after I saw Boeing’s (NYSE:BA) long-term projections for aircraft needs.

All these new planes that are being planed will need titanium, thanks to the high cost of oil and the ability of titanium to make the plane not as heavy and use less fuel. The new projections gives Titanium Metals Corporation (TIE) a revived long-term sustainability in the market.

TIE is a pure titanium play, so it should not be affected by the moves in its competitors Allegheny Technologies Incorporated (NYSE:ATI) and RTI International Metals (NYSE:RTI), which are also involved in specialty steel and alloys. (But we all know the trader’s mind does not differentiate so well.) So it may take a hit when ATI and RTI report sometime in July/early August, due to the potential slowing in the steel segments.

Also, because of the long-term sustainability of the use of titanium, TIE is definitely a buyout candidate for a company wanting to enter this space.

As per the chart, TIE looks to have bounced off a relative low (thanks to an upgrade from Matrix Research). It is oversold and consolidating from recent negativity, with the potential to move higher near-term.

click to enlarge
tie

As far as how to play it, I happen to agree with Lenny (but the 25 Dec calls are just as good.)