Increased Production Should Create A Better Second Half For Titanium Metals

| About: Precision Castparts (PCP)

Before the market breakdown I believed TIE could hit over 39 due to its trading pattern following a strong earnings report. With falling sponge prices and increased production (not at full capacity yet) established in April 2007, and the continued demand for titanium, I see TIE beating, and potentially increasing, margins.

It has a heavy short interest, with insiders buying fairly consistently for the past few months. With a solid earnings upside, TIE can see a pretty big run upward given the short interest… and unfortunately vice versa.

I am not playing anything on the short-term with TIE so I do not care if it does not beat when it reports (although I think it will). It will definitely have a better 2nd half due to the increase in production. TIE’s facilities consistently run at 95% capacity, increasing capacity increases earnings. It is a matter of what it was able to squeeze out of its new facilities, as well as costs. So it may not blow away revenue, but earnings should beat.

FYI: now is a good initial entry for TIE.

tie chart

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