2 Cheap Aerospace Stocks Receiving Some Love From Analysts This Week

Includes: OA, TGI
by: Bret Jensen

Finding cheap stocks in the market is getting a little harder after the rally of the last few months. The aerospace sector is one area that still has numerous stocks with reasonable valuations. Here are two that received some love from analysts last week.

"Orbital Sciences Corporation (ORB) develops and manufactures small and medium-class rockets and space systems for commercial, military, and civil government customers." (Business description from Yahoo Finance)

Four reasons ORB has upside from $15 a share:

  1. Jefferies reiterated its Buy rating and upped its price target to $21 from $19 this week on the stock. The $21 price target matches the mean price target held by the six analysts that follow the stock.
  2. The company has a robust balance sheet with over $100mm in net cash on the balance sheet (approximately 12% of its market capitalization).
  3. The company has grown revenues at an average 7% annual clip over the past five years. Analysts expect between 8% and 10% sales growth in FY2012 and FY2013. The stock has a five-year projected PEG of under 1 (.98).
  4. The stock is selling at the bottom of its five-year valuation range based on P/E, P/S, P/B and P/CF.

"Triumph Group (NYSE:TGI) engages in the design, engineering, manufacture, repair, overhaul, and distribution of aerostructures, aircraft components, accessories, subassemblies, and systems worldwide." (Business description from Yahoo Finance).

4 reasons TGI is a bargain at $61 a share:

  1. Credit Suisse reiterated its "outperform" rating on Triumph Group and raised its price target by a dollar to $79 a share. The median price target by the 13 analysts that cover the stock is $77 a share.
  2. The company has improved earnings at an over than 20% annual rate over the past five years, but is priced at under 10 times forward earnings.
  3. The stock is selling near the bottom of its five-year valuation range based on P/E, P/S and P/CF.
  4. The company has easily beat earnings estimates for the last four quarters and consensus earnings estimates for FY2012 and FY2013 have moved up over the last two months.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TGI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.