AerCap Holdings N.V. (AER): A Bull Case Theory

We came across a bullish thesis on AerCap Holdings N.V. (AER) on No Deep Dives’ Substack by jefke. In this article, we will summarize the bulls’ thesis on AER. AerCap Holdings N.V. (AER)’s share was trading at $94.70 as of Jan 13^th. AER’s trailing and forward P/E were 7.64 and 7.44 respectively according to Yahoo Finance.

A close up shot of a commercial aircraft in flight with its expansive wingspan.

AerCap, the world’s largest aircraft lessor, is positioned to benefit from a global aircraft shortage driven by underproduction by Boeing and Airbus, along with engine reliability issues that limit aircraft availability. This has led to an increase in the value of AerCap’s fleet, enhancing its asset base. Despite trading at an 8.2x forward P/E and slightly above book value, the company’s book value does not fully reflect the true worth of its assets, as AerCap frequently sells planes above book value. The company has capitalized on this undervaluation by executing aggressive share buybacks, providing added value to shareholders. Historically, the stock has rarely exceeded a 1x price-to-book ratio, but given the current favorable conditions and the undervalued asset base, AerCap’s fair value could easily surpass 1.5x P/B, suggesting significant upside potential for investors and presenting an attractive investment opportunity in the aviation sector.

AerCap Holdings N.V. (AER) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held AER at the end of the third quarter which was 64 in the previous quarter. While we acknowledge the risk and potential of AER as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AER but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.