Trading Ideas: Riding Goodrich all around the World
Value Stocks are in according to our technical analysis of more than 500 industry charts and ETFs. To help our readers find hot ETF stocks worthy of their investment dollars, we screened more than 500 value stocks looking for a bargain. One such company landed right in our lap.
Goodrich Corporation (GR) should be an excellent addition to conservative and aggressive portfolios alike.
Goodrich, a Fortune 500 company, is a global supplier of systems and services to the aerospace, defense and homeland security markets. Goodrich offers an extensive range of products, systems and services for aircraft and engine manufacturers, airlines and defense forces around the world. Their products are on almost every aircraft in the world.
Evaluating Goodrich’s Earnings
GR recently announced its 2nd quarter earnings and delivered a rock solid quarter. The aerospace company had an excellent quarter with strong organic sales growth of 17%, including double-digit growth in each of its 4 market channels. They also raised their full year outlook to $4.80 to $4.95 range, significantly up from $4.30 to $4.45.
Fundamental Analysis of GR’s current stock price
As we mentioned in our opening, value stocks are in and there is no other way to define Goodrich’s share price. It currently trades at only 10 times expected earnings. When you compare Goodrich’s forward PE to the company’s 17% growth rate, it’s a bargain. In fact we did a little research, in the past 10 years every time GR’s PE has been under 10, its earnings were declining. The company has said they are well positioned to grow through 2009 as airlines try to become more fuel efficient. A PE of 10 also represents a 35% discount to its peer group despite having one of the industry’s highest growth rates. Adding to our confidence is a PEG ratio of .7, a 40% discount relative to the average aerospace stock, and a return on equity of 23.63%.
Technical Analysis of GR’s possible future price movement
We see 3 reasons to believe Goodrich is headed higher.
- All the short term moving averages are crossing above their longer counterparts.
- The Stock recently closed above its 50 day moving average for the first time in nearly 3 months.
- The MACD line recently moved from below to above zero.
We see very little resistance in the way of the stock moving to $57.5 in the very near term and $62.5 in the next 1 to 3 months.
Suggested Stop: $45.62
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