Howmet Aerospace is a well-positioned industrial company within the aerospace & defense industry pressing all-time highs, despite the February- March volatility storm. HWM, formerly part of Alcoa, was focused on the oil & gas industry until a rebrand in 2020 when they re-focused on primarily aerospace, defense and commercial transportation markets. Looking around in aerospace and defense, there are some standout companies that have weathered the market pullback quite well including Kratos Defense & Security , Heico , General Dynamics , even Boeing and General Electric (even though GE is classified as an Industrial Conglomerate). All of these stocks look tradable to the upside in light of the Trump administration's policies aimed at reshoring manufacturing, the implementation of AI within aerospace & defense, and a strong rebound in air travel. Howmet is well positioned in two specific areas of commercial aerospace and industrial gas turbines. We first added HWM to our growth portfolio at Inside Edge Capital on June 24, 2024 with a 1% allocation. Even though the stock is up approximately 75% in that time, during the next reallocation I plan to increase the size by at least a 2% allocation once we have a bit more confidence the broader market pullback is complete. Based on last week's article of the broader market successfully holding our support levels ( almost exactly at our levels ). I think it's about time to attack. Turning to the technicals on the weekly chart, you'll see a beautiful uptrend that began in October 2023 that has formed quite a formidable parallel trend channel (green). Amid the recent market pullback, HWM tested parallel channel support along with the 20-week moving average (orange) and re-engaged on the upside ahead of the broader market averages. Highlighted below the chart is some scary good yearly percentage EPS growth (for an industrial company) of 88%, 65% and 54%. And though 2025 is expected to moderate out to just a 17% growth, 2026 is looking to move back above 20% growth. Looking at the daily chart, you can see a similarly impressive quarterly EPS growth that should be able to carry it above the dotted green resistance breakout level to new highs. If we do in fact increase our position size, I will use a stop around the March lows of $120 for the entirety of the position. I do understand the stock commands a higher valuation with a current PE of 48. But when you consider the EPS growth rate and solid position in the explosive growth sectors discussed, the forward PE of 31 X's 2026 expected earnings of $4.04 based on a last trade of $136.32 may not seem all that stretched. Of course, it is the combination of fundamentals and technicals to manage risk on high growth positions like this that allows us to actively manage our stock portfolios. -Todd Gordon, Founder of Inside Edge Capital, LLC Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited! DISCLOSURES: Gordon owns HWM in his wealth management company Inside Edge Capital, LLC. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
