Stock Strategist: Learning to Love the Narrow-Body Jet Upcycle

[Morningstar Logo] [Company Site] [Company News] [Membership] [Portfolio] [Stocks] [Options] [Funds] [ETFs] [Markets] [Tools] [Personal Finance] [Discuss] Stock Strategist Learning to Love the Narrow-Body Jet Upcycle We don’t see order weakness in commercial jets as a reason to panic. [tab_bar] by Chris Higgins | 12/19/2016 5:30:00 PM Advertisement Order Now - Morningstar's Stock Newsletter It turns out there's a simple way to generate real wealth in the stock market: Buy quality companies when they are trading on the cheap and hold them until better opportunities arise. That's how Morningstar StockInvestor has consistently beaten the S&P since 2001. Get a complete blueprint for how to put our proven strategy to work for you! [Click to try!] Aerospace data firm Ascend recently hosted an update on the aerospace market. The company was sanguine on current market dynamics but warned that indicators are flashing orange. Our nuanced view posits that larger wide-body jets remain the biggest concern for [Boeing] [BA] and [Airbus] [AIR], but narrow bodies look more secure. Regional jet growth looks underwhelming, but [Embraer] [ERJ] still enjoys a commanding position. We point to Airbus, [Safran] [SAF], and [United Technologies] [UTX] as the three names that will benefit most from the narrow-body upcycle. This year will see flat to declining commercial jet backlogs for the first time since 2009. But we don’t see order weakness as a reason to panic, particularly in narrow bodies. According to Ascend, narrow-body backlogs cover planned production rate increases to about 60 aircraft per month through the end of this decade, giving us comfort that rates will move up. Backlogs represent 9.5 years of production, and this cushion combined with hundreds of Airbus A320 and Boeing 737 operators provides manufacturers with potent risk-management levers. We note that manufacturers put these levers to good use in 2009-11, moving delivery rates up in the face of weak demand. In addition, Ascend displayed data showing a healthy narrow-body lease market, with used values still slightly above fundamental values. To read more, click [here]. Sponsored Links [Buy a Link Now] New: ETF Managed Portfolios Center On [MorningstarAdvisor.com]: Tap into the industry's best source of information on ETF strategies for financial advisors. See key performance data, screen for specific strategy attributes, and learn more about this fast-growing area of the investment marketplace. [Click to get started]. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio]. Search Most Recent Articles [Balanced Exposure to the Natural-Resources Sector] [Bonds Are Riskier Than You Think] [Morningstar's 2016 Portfolio Makeover Week] Latest Analyst Reports [Coca-Cola] [Adobe Systems] [Boston Beer] [Chipotle Mexican Grill] [Oracle] ABOUT OUR EMAIL TO UNSUBSCRIBE this email address to the Stock Strategist newsletter, please click "reply" and then click "send." This will unsubscribe only this email address to this specific newsletter. All subscription changes will take effect within one business day. Replies are not read by individuals, so please do not use this for queries about Morningstar.com. If you have questions about Morningstar.com or your membership, send a note to [joe@morningstar.com]. ABOUT OUR PRIVACY POLICY Please [click here] to learn about Morningstar's privacy policy. (c) Copyright 2016. Morningstar, Inc. 22 West Washington Chicago, Illinois, 60602 All rights reserved.