The Boeing Company (BA), Hexcel Corporation (HXL): Lighter Airplanes Are No Dream

The Competition

Zoltek Companies, Inc. (NASDAQ:ZOLT) found customers in the wind power industry, but this carbon fiber maker doesn’t want to be seen as a wind power pure play. Zoltek Companies, Inc. (NASDAQ:ZOLT)’s 2012 annual report provides a reminder that carbon fiber composites have many uses, and the company specifically brings up the composite based Boeing 787 Dreamliner and Airbus A350 as examples. The carbon fiber maker also explains that its current sales figures mostly reflect results from its wind turbine business, but it also has research under way in other areas.

Right now, Hexcel looks cheaper than Zoltek. Hexcel Corporation (NYSE:HXL) has a forward P/E of 14 and a PEG ratio of 1.29, while Zoltek has a forward P/E of 19 and a PEG ratio of 1.86. Zoltek Companies, Inc. (NASDAQ:ZOLT) currently trades for a premium because of buyout interest from Quinpario Partners. Bloomberg’s Jack Kaskey reported that Quinpario offered a price in the mid-teens for Zoltek shares, and the investor group’s also looking at other chemical and materials companies, including mid-caps. Hexcel has a market cap of $2.87 billion.

Takeaway

Composite airplane parts provide the main reason to buy Hexcel right now. Now that Boeing’s fixed the Dreamliner problems, these planes can demonstrate their fuel efficiency to the airlines once again. The Airbus A350 will also help showcase Hexcel’s technology. Hexcel currently depends heavily on the airline industry, which is a risk, but wind power and defense sales provide some diversification and the company’s technology could show up in other industries in the future. Hexcel Corporation (NYSE:HXL)’s one of the relatively rare stocks that carries a five star CAPS rating, and its products can help its customers improve their margins, which could drive sales. This materials company looks like a decent investment.

The article Lighter Airplanes Are No Dream originally appeared on Fool.com and is written by Eric Novinson.

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