Aircastle Looks Ready for a Bounce

Feb.27.08 | About: Aircastle Limited (AYR)

Aircastle (NYSE: AYR) stock has taken a serious beating in the past 52-weeks. With investment banks raising their ratings, insiders buying, and a nice dividend, we believe it's time for this stock to bounce.

Last week, Aircastle said that fourth-quarter earnings surged 78% with sales more than doubling. The earnings, however, came in 4 cents shy of the $0.50 per share expected by Wall Street, sending Aircastle shares tumbling to it's 52-week, dropping more than 12%.

Since then, shares have recouped some of their losses thanks to analyst upgrades from Goldman Sachs and Citi. Both upgrades noted that the sell off was overdone and that the earnings shortfall was due mainly to the timing of new aircraft acquisitions, higher depreciation costs, and one-time SGA costs. Goldman raised it's rating to Buy from Neutral, citing strong lease rates and terms for the aircraft leasing market.

On Tuesday, two Aircastle insiders purchased Aircastle shares on the open market, for a combined total of nearly $100,000. This is another positive for Aircastle stock, as insiders also believe the sell off was overdone.

It is our recommendation to begin accumulating more Aircastle shares while the price is depressed. When Aircastle releases information regarding it's next dividend payout, you can bet that the payout will increase at least 5%, more likely approaching 13-15%, representing a sizable (upwards of 13.5% from today's stock price) dividend to keep you profitable while the stock recovers.

Disclosure: No position