Sunday, July 20, 2014

Stocks Exposed to the Business Jet Market

It's no secret that the commercial aerospace market has been very strong in recent years, with Boeing and Airbus continuing to build up large backlogs, but one sub-segment has been far slower to recover from the recession: the business jet market. However, it looks as though it's hit bottom, and it could be set to grow in future. Companies like General Dynamics (NYSE: GD  ) , Bombardier (TSX: BBD.B  ) , Ametek (NYSE: AME  ) , and Textron (NYSE: TXT  ) are worth considering in order to play this theme, and Fools should start looking more closely at these companies.

Is the business jet market recovering?
Industry data and historical relationships suggest that the answer to this question should be in the positive. The business jet market has always been super-cyclical, as corporate spending on them tends to lag corporate profitability. However, in the last few years, corporations have been highly reluctant to open the spending floodgates. Indeed, they continue to take a "cautiously optimistic" approach in the light of a moderately growing economy.

The good news is that, according to a Bloomberg research report, the downtrend in business jet deliveries looks to have bottomed, and with corporate profits on the rise, it's reasonable to expect some growth from here.