Hexcel's advanced composites are stronger and more lightweight than traditional materials like aluminum, and that's a crucial consideration in aviation, where lower aircraft weights usually translate into more cost-efficient planes. The case for buying the stock has always been that newer planes tend to have far higher shares of advanced composites content.
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Moreover, there's very little aftermarket demand for its products - its primary demand driver is airplane production.
The company produces lightweight carbon fiber reinforcements and resin systems, and aerospace is its core end market. As such, GE Aviation will have to be the cornerstone of GE's recovery story as management tries to return the conglomerate to generating high-single-digit free cash flow (FCF) margins and at least $7 billion of FCF by 2023.įew businesses got hit harder by the pandemic than Hexcel. Either directly or as part of its joint venture with Safran, CFM International, the business is responsible manufacturing for the engines that power around two-thirds of global flight departures. GE Aviation is GE's most important business and its most significant earnings and cash-flow generator. In that context, aviation-heavy conglomerate General Electric ( GE -2.09% ), advanced composites supplier Hexcel ( HXL -3.96% ), and simulator and pilot training company CAE ( CAE -3.24% ) all look like attractive stocks to buy now. However, instead of worrying about where the aerospace industry has been during the last couple of years, investors would be better served to focus on the multiyear recovery ahead. Moreover, many travel sector experts don't expect flight departures will recover to their 2019 levels until 2024. It's no secret that the aerospace sector took a severe hit due to the COVID-19 pandemic.
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