Strange but Wonderful Day in the Market

Today was a most unusual day in the stock market. After several days in a row of oil going lower, it rallied over $5 per barrel. This would seem to be bad news for a stock market that has been sinking lower even as oil had been selling off. Instead, the DOW rallied 214 point to finish at 12,604. Just about every sector showed strength and it was hard not to be a winner today. One stock that was down and continues to puzzle me is BE Aerospace. The stock has sold off sharply over the last week on virtually no news. Either somebody knows something or this is a tremendous buying opportunity. I continue to like the stock until I see a reason not to like it. As I've mentioned several times before, the company makes equipment which is used in airplanes. They have an advantage over competitors because the equipment they make tends to weigh less and this helps the fuel efficiency of the aircraft. Earlier this year, I read the transcript of the fourth quarter 2007 earnings report conference call. Management was very bullish and raised their guidance for 2008. They talked a lot about the Boeing 787 and how it was going to be a big driver of earnings growth going forward. However, they said it was more of a 2009 story. They also mentioned that less than 5% of their record backlog was for the 787. The only negative that I can find about the company is the theory that Jeff Mack of "Smart Money" has been reciting lately. He makes more of a general call on the airline industry and mentions Boeing rather than BEAV. He believes that the airlines are all in bad financial shape and will not be able to afford new planes. I agree that the domestic airlines are doing poorly, but the foreign airlines are doing better and they can offset some of the lost sales to the domestics. Also, I'm not sure if the domestic airlines have much choice when it comes to upgrading their fleets and I believe when they start to buy new planes they will definitely be looking to buy those that are cheaper to operate. If they are able to get by without buying a lot of new planes, they will probably have to refurbish some of their existing planes. This is also a positive for BEAV because they have a division that does just this. I know I've said it many times, but I have to repeat it again. I think this company has many ways to win and I am betting they will deliver on future earnings growth forecasts. I'm still bullish on the stock until I see something that makes me change my mind.