Howmet Aerospace is Thursday's IBD Stock Of The Day as the supplier of precision metal parts rises on improved tailwinds for commercial and defense aircraft. HWM stock rose close to a buy point on Thursday, clearing an early entry. The move came as shares of Boeing, a key customer, surged, possibly helped by headlines that Delta is working on a deal for 737 MAX 10 jets.
Howmet's Boeing-Fueled Rally?
Howmet, based in Pittsburgh, separated from Arconic in 2020, three years after the combined companies broke off from Alcoa. Howmet's initial period on its own was turbulent, as the Covid crash in air travel added to Boeing's 737 MAX woes.
But commercial air travel is looking up, and airline production is following. A further dwindling of Covid could spur more orders.
There's also hope that FAA approval of Boeing's bid to resume 787 widebody deliveries will come soon. Meanwhile, Russia's invasion of Ukraine has helped fuel international demand for Lockheed Martin's F-35 military jet that Howmet supplies.
Russia's invasion of Ukraine also has opened up another potential source of upside for Howmet, via its supply of titanium. Seeking alternatives to Russia's state-run VSMPO, the largest titanium supplier, a number of companies have knocked on Howmet's door.
"We are treating this as a serious opportunity and should see benefits in the back end of the year going into 2023," Howmet CEO John Plant said on the May 3 first-quarter earnings call. He said the company would update guidance to reflect the titanium opportunity on the Q2 call in August.
Howmet is also expecting a boost from its forged wheels business. Plant sees a 15%+ boost to volume as fading supply constraints allow for boost to truck output.
HWM Stock
HWM stock climbed 3.7% to 36.99 in Thursday's stock market action.
Howmet is working on a 10-week double-bottom base with a 37.63 buy point. However, Thursday's move carried HWM stock past an early entry point of 36.13, 10 cents above last week's high. It's still not too far from the 50-day moving average.
Aggressive investors already could have established an entry point as HWM stock blew past its 50-day line while breaking a downtrend on May 27.
Howmet's relative strength line, the blue line in the charts provided that tracks a stock's performance vs. the S&P 500, is hitting a five-year high, confirming its market leadership.
HWM stock is a new addition to IBD's SwingTrader portfolio.
Boeing stock jumped 7.5%, but the Dow Jones aerospace giant is well below its falling 50-day moving average.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trends and what they mean for your trading decisions.
