Wednesday September 19, 2012
by John Persinos, editor Personal Finance
The first lunar footprints didn’t actually come from Neil Armstrong; that distinction belongs to Hexcel Corp. (HXL).
A pioneer in the manufacture of high-performance materials, Hexcel made the composite footpads on the Apollo 11 lunar module, as well as similar components for the Mercury and Gemini space programs.
Hexcel continues to dominate the composites market and is positioned to ride the accelerating shift toward these super-tough materials in a wide range of industries.
Composites are polymer materials reinforced with carbon fiber, forming a strengthened combination that’s light, flexible and durable.
The next decade will see an explosion in the use of composite materials, in a variety of applications that include cars, trains, planes, satellites, boats, bicycles, housing materials, sporting goods, and wind energy.
According to a 2012 report by Materials Technology Publications, annual global sales of composites are estimated to reach $28.2 billion by 2015 and $48.7 billion by 2020, up from $16.1 billion in 2011.
The continual push for greater fuel efficiency is boosting demand for lightweight composites to replace metal parts in automotive manufacture.
The best play on the world’s growing thirst for composites is Hexcel, the largest US-producer of carbon fiber and by far the number one producer of aerospace composite materials.
As demand increases for these sophisticated materials, many manufacturers lack the engineering experience and skills to move away from metal-based assembly lines, forcing them to turn to Hexcel.
The company’s greatest opportunities for growth stem from aerospace; Hexcel is the chief composite supplier for aerospace giant Boeing, which has bet the farm on its new Dreamliner 787, a composite-built passenger aircraft.
Composites offer dramatic performance benefits for aircraft, including reduced weight, improved fuel burn, and better resistance against corrosion and damage.
On July 23, Hexcel reported second-quarter 2012 revenue of $399.2 million, 12.9 percent higher than the $353.7 million reported for the same quarter a year ago.
Second-quarter earnings were $48 million, or $0.47 in earnings per share (EPS), compared to $37.4 million or $0.37 in EPS for the year-ago quarter.
Management reaffirmed its 2012 outlook for total annual revenue to be in the range of $1.55 billion to 1.65 billion.
Hexcel sports a price-to-earnings (P/E) ratio of 13, slightly below the P/E of 13.6 for its sector of industrial goods, making this composite king a good bet for investors seeking recession-resistant, long-term growth amid a still troubled economy.
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