Aircastle Limited (AYR), AerCap Holdings N.V. (AER) – This Industry Is Flying: Which Stocks to Buy?

As a result, Barclays’ 2Q13 EPS estimate remains unchanged at $0.54. However with the 1Q beat, the FY13 EPS estimate was raised to $2.20 from $2.10 and the FY14 EPS estimate was raised to $2.25 from $2.20. Barclays holds a price target of $18 (which is almost 9% up from current levels).

Overall, improving industry fundamentals and sentiment should aid AerCap Holdings N.V. (NYSE:AER)’s stock as well as other aircraft leasing stocks. However, better relative returns are expected at other aircraft lessors that provide more growth or income.

Air Lease Corp (NYSE:AL) reported its quarterly results on May 9. The company’s results came in weaker than the industry’s standards. The company reported 1Q earnings of $0.38 per share, slightly less than the estimate of $0.42.

The difference was a result of softer than expected revenue. However, that doesn’t mean that I am bearish on the stock. Air Lease Corp (NYSE:AL)’s story appears to be developing as expected, with committed growth (as well as some room for incremental growth, progress towards investment grade credit rating (with Kroll issuing an A- rating on May 8) and continued access to the financing markets.

Barclays did not change its 2Q13 EPS estimate of $0.43, FY14 EPS estimate of $2.40, and a price target of $38 (27% upside from current levels).

Holistically stating, Aircastle Limited (NYSE:AYR) is well positioned within an industry that is exhibiting improving fundamentals and sentiment. Some valuable growth is expected, and as a result, solid earnings growth could be seen at Aircastle Limited (NYSE:AYR) in the years ahead.

My Foolish take

As already noted, the overall aircraft leasing industry’s fundamentals are improving. However, in this situation, we need to make the optimal choice so that we get the best return on our investment. In this situation, we can conclude that those companies offering relatively high growth (like Air Lease) or attractive income combined with some growth (like Aircastle Limited (NYSE:AYR)) would provide better relative returns as compared to the other companies in the industry like AerCap Holdings N.V. (NYSE:AER).

The article This Industry Is Flying: Which Stocks to Buy? originally appeared on Fool.com and is written by Zain Abbas.

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