HEICO Corporation (HEI): A Bull Case Theory

We came across a bullish thesis on HEICO Corporation (HEI) on Substack by Bulls On Parade. In this article, we will summarize the bulls’ thesis on HEI. HEICO Corporation (HEI)’s share was trading at $220.85 as of Feb 14^th. HEI’s trailing and forward P/E were 60.18 and 51.81 respectively according to Yahoo Finance.

A technician inspecting a commercial jet engine in a specialized testing facility.

Heico, a leader in aerospace, aviation, industrial, electronic, and military applications, exemplifies the serial acquirer model with its consistent strategy of acquiring smaller companies to expand its product offerings and drive growth. With annual sales of approximately $3.8 billion, Heico operates through two business units: flight support and electronic technologies. The company’s acquisition strategy focuses on the fragmented industrial components space, where numerous small businesses supply parts to various end markets. Since 1999, Heico has acquired nearly three dozen companies, strengthening its position in the aerospace and aviation sectors by integrating new capabilities into its existing operations. This acquisition strategy, centered on companies with strong free cash flow, mirrors the playbook of early Berkshire Hathaway, acquiring cash flow-positive businesses and rarely divesting assets. Heico’s success lies in its ability to identify and acquire businesses that complement its core operations, expanding its product offerings and fueling long-term growth. The company’s ability to effectively allocate capital and integrate acquisitions has been a key driver of its success, setting it apart from others that fail to execute successful acquisitions. With a proven track record of accretive acquisitions, Heico represents a strong investment, poised for continued growth through its strategic acquisition model.

HEICO Corporation (HEI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held HEI at the end of the third quarter which was 53 in the previous quarter. While we acknowledge the risk and potential of HEI 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 HEI 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.