Precision Castparts Corp. (PCP-N)

(A Top Pick July 2/15. Up 18.04%.) This was acquired in January.

(A Top Pick May 12/15. Up 10.35%.) Taken over by Berkshire Hathaway.

(A Top Pick Feb 20/15. Up 9.21%.) Acquired by Berkshire Hathaway.

This is about to be acquired by Berkshire Hathaway. They offered $235 a share and he sold his holdings. If you own, tender or sell the stock and look to buy something else.

Still bullish on this stock. It has had some ups and downs since recommending. It had some bad news from Boeing. But it should be just a temporary thing. Facing some headwind with the energy industry, not selling heavy casting in the energy industry. Tremendous manufacturing business in the US. Quite happy with it and should see it go north of $200. Good value at this price.

Makes parts for the aerospace industry. Aerospace has been going through a replacement cycle of new plane upgrades, so companies like Boeing (BA-N) have had a pretty good go over the last number of years. This company had very, very strong growth because their content per plane was going up. They have seen a deceleration over the last few quarters, so the stock is down over the last year. If you need to own something in the space, you could look at Boeing, which has consolidated over the last 4 months.

They make primarily parts for airplanes. Boeing recently ran down their inventory. The stock is down 16% year to date. 16 times earnings. This is a real premier industrial company and is a bargain. Low yield, but he thinks there is potential for an increase as well as stock buy backs. Sees it in the $250 range when oil recovers.

Makes castings for oil companies and refineries, which isn’t doing so well, but almost half of their sales come from large aircraft manufacturers, a business that is hard to get into if you are not already in it. A very well run old American company with very strong management. Good upside potential. Dividend yield of .06%.

They have warned twice this year. The problem is that they have some exposure to oil and gas. No one is ordering drill parts. There is big exposure to airplanes including demand from China for bigger models. Gushing free cash flow and it is a good time to buy this stock. He is looking out 3-5 years.

This company makes all the nuts and bolts and complex metal parts that go into aerospace engines and airplanes. They sell to Boeing, Airbus, Rolls-Royce and GE. Backlog is massive. Like a lot of companies, this has some exposure to oil/gas, which hurt their earnings a little bit and the stock has fallen about 30%. He sees, over the next 10-15 years, aircraft demand doubling, mainly due to Asian aircraft travel including cargo and business travel. Great free cash flow. Dividend yield of 0.06% and it is growing.

Precision Castparts (PCP-N) or Raytheon (RTN-N). Which would be better for getting into the US military defence sector? This one is more focused on commercial jetliners while Raytheon is more about military systems. We are at a point in the cycle where the US is likely going to have to increase their spending on defence, and it is fairly early in the cycle for this group. Because of this, he would prefer to own Raytheon.

Forge and cast products, very complex products. Likes it because these products are used for jet engines and turbines and in the automotive and oil and gas sectors. The company is going to be in demand for their products. Looking at 17% increase in next year’s earnings. A classic industrial play. He is looking for aviation to get better.

Went through a consolidation recently which was in line with the markets. He really likes the aerospace industry and these guys sell into it. If it can hang in around $242 he believes it will recover.

Boeing and Airbus are into a new product cycle and one of the big beneficiaries of this is the parts providers. Cost of capital is very low right now so the airlines are all trying to become more efficient.