Hexcel Corp (HXL-N)

This works primarily with structural products, composite materials. Their biggest customer is the aerospace industry. 30% of revenues come from Airbus and 35% comes from Boeing. They basically do the skin on airplanes. With the new airplanes, and the huge production Airbus and Boeing are involved with, this company is doing very well and growing at a fairly fast clip. Dividend yield of 0.7%. (Analysts' price target is $67.54.)

Favourite defence stock?He likes defence, but a lot of them have had huge runs in the last year. You need to be cautious. They are probably “Holds” at best. Trading at pretty close to 52-week highs, and he wouldn’t be a buyer. You probably would be okay holding them, but wait for a pullback. His favourite is Hexcel, but it has had a big, big run and he would treat it as a hold.

(Top Pick Dec 17/14, Up 14.35%) Supplies Boeing and Airbus. A great business to be in as the need for lighter material is so coveted.

A derivative play and they are in the structural materials business. They do the carbon fibre material, and two thirds of their business is with Boeing and Airbus. Between the 2 they have over $1 trillion of airplanes that have been ordered and on the block to be assembled. This company makes about $5 million an airplane, and there are thousands and thousands of them that will be produced over the next decade. Trading at a very reasonable multiple and has a good growth rate of around 15% per year. A fine cash flow company with a cash flow of about 7.5% yield.