8. HEICO Corp (NYSE:HEI)
Short % of Float: 4.26%
Number of Hedge Fund Holders: 53
HEICO Corp (NYSE:HEI) manufactures jet engines and aircraft component replacement parts. It operates in two segments: Flight Support Group (FSG) and Electronic Technologies Group (ETG). The FSG Segment repairs, overhauls, and distributes aircraft and jet engine components, instruments, and avionics for aircraft repair companies, domestic and foreign commercial air carriers, and military and business aircraft operators. It comprises the HEICO Aerospace Holdings Corp. and HEICO Flight Support Corp., along with their subsidiaries.
The company’s ETG segment comprises HEICO Electronics Technologies Corp and its subsidiaries. It manufactures, designs, and sells several kinds of data and microwave, electronic, and electro-optical products, including laser rangefinder receivers, infrared simulation and test equipment, backup power supplies, and electrical power supplies.
HEICO Corp (NYSE:HEI) is running on solid fundamentals. Its net sales and consolidated operating income produced record results in Q2 2024, improving by 39% and 33%, respectively, compared to Q2 2023. This growth was primarily due to a 21% increase in organic net sales growth in the Flight Support aftermarket replacement parts. The Flight Support Group’s net sales reached a record $647.2 million in the quarter, experiencing a 65% increase. Other factors supporting this growth include improved results at ETG, the impacts of profitable fiscal 2023 and 2024 acquisitions, and strong organic growth.
The company’s investment in Wencor is proving profitable. HEICO and Wencor’s high-quality products hold a competitive advantage in the market. HEICO Corp (NYSE:HEI) expects a continuation of net sales growth in ETG and FSH in the second half of 2024. This growth will primarily be driven by a strong demand for the company’s products and contributions from its fiscal 2023 and 2024 acquisitions.
ETG is specifically in a solid position to expand and grow its net sales of defense-related products in the second half of 2024, supported by a strong backlog. The company is increasingly developing new products and services to further improve profitability, ensuring commitment to further market penetration while maintaining its flexibility and financial strength.
Alger Small Cap Growth Fund stated the following regarding HEICO Corporation (NYSE:HEI) in its Q2 2024 investor letter:
“HEICO Corporation (NYSE:HEI) is a leading manufacturer of Federal Aviation Administration (FAA) approved jet engine and aircraft component replacement parts. We believe the company is well-positioned to benefit from the steady aging of the global commercial aerospace fleet, resulting in increased consumption of aftermarket parts. Additionally, ongoing production issues from two major aircraft manufacturers have reduced the projected new plane deliveries, further supporting our view that the average age of the global fleet is likely to remain elevated over the next few years. During the quarter, HEICO’s shares contributed to performance, where the company delivered strong quarterly results with revenues and earnings beating analyst estimates along with continued execution on strategic tuck-in mergers and acquisitions.”
