On June 7, 2013, shares of Precision Castparts Corp. (PCP) hit a new 52-week high of $219.42 with 862456 shares traded, beating its previous high of $218.85 attained on May 31. The average volume traded during the last three months totaled 644,366 shares.
The company’s current forward P/E ratio is 17.96, which is above the S&P 500 companies’ P/E ratio of 15.00. The shares are currently trading at 218.38 as of closing on June 7, with a year-to-date return of 13.6%.
Let's try to gauge the factors that propelled the stock to its current 52-week high.
Precision has a proven track record of increasing market share through acquisitions and developing new growth opportunities. The company is expected to benefit from the strong free cash flow and enormous funds available that will its boost organic.
Precision experienced significant growth in its Aerospace and Forged products in 2013. Currently, the aerospace market looks promising and is expected to grow in the near future. Also, demand in industrial gas turbine (IGT) looks encouraging. The company’s new product, Boeing 787 is also beginning to gain traction. The company is continually focusing on expanding its product lines and markets.
Moreover, the company completed eight acquisitions in fiscal 2012. These acquisitions contributed approximately $400 million to sales in the previous fiscal. With improved sales and strong market position based on global diversity, Precision is poised to grow organically.
Given management’s stellar acquisition track record, new product line and robust free cash flow generation, investors can look forward to improved results in fourth quarter in fiscal 2013 as well.
Other Stocks to Consider
Presently Precision has a Zacks Rank #2 (Buy). Some other companies in the industry worth considering at the moment include NSKLtd. (NPSKY), which has a Zacks Rank #1 (Strong Buy), and Norsk Hydro ASA (NHYDY) and Northwest Pipe Co. (NWPX) both having a Zacks Rank #2 (Buy) each.
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