HXL - Buy the Dip? This Growth Stock is a Smart Buy.
The recent sell-off in advanced composites company Hexcel (NYSE: HXL) is a buying opportunity in a compelling long-term growth story. The company is set for solid growth in the coming years, and investors shouldn't fret too much over its near-term free cash flow (FCF) outlook. Here's why Hexcel is a great candidate for a growth investor's portfolio.
First, a few words on what makes the stock attractive. The case for buying Hexcel rests on the idea that sales in its core market, commercial aerospace, will grow enormously as Boeing and Airbus ramp up airplane production rates. Moreover, the company's composites offer a weight and strength advantage over traditional metals and are increasingly used on newer models. Hexcel's composites are also used on larger business jets manufactured by Dassault and Gulfstream.
As such, Hexcel's revenue will grow even if the same volume of airplanes are produced -- provided a higher percentage of newer models are built. Hexcel also has a growth opportunity from the return of international travel because that usually leads to an increase in widebody orders and production. Hexcel has a higher amount of content per airplane on widebody models, where managing weight is an even more significant issue than on narrowbody aircraft.
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Buy the Dip? This Growth Stock is a Smart Buy.