Pat McKeough responds to many requests from members of his Inner Circle for specific advice and stock picks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week an Inner Circle member asked us about a Canadian stock whose products came into sharper focus following the disappearance of Malaysia Airlines Flight MH370. Flyht Aerospace Solutions makes a number of products, but the two attracting the most attention are devices that collect and stream flight data and could have shed light on the fate of the Malaysian airliner as it disappeared. Pat examines the company’s business and assesses its prospects for growth in a highly competitive market. Q: Hi Pat: I’m a dedicated follower, and my portfolio continues to grow handsomely due to your advice and your excellent newsletters. I’m looking at the following company to complement my portfolio: FLYHT Aerospace Solutions. Your thoughts and comments would be greatly appreciated. A: FLYHT Aerospace Solutions (symbol FLY on Toronto; www.flyht.com) supplies a number of products and services to the aviation industry. These include a data-collection device, called AFIRS UpTime, that records flight information as it happens and relays it to the aircraft operator’s facilities by satellite. FLYHT also sells a system called FLYHTStream, an emergency device that sends real-time data to the ground to be analyzed immediately. Recently, the company introduced the Dragon, a lightweight, portable satellite communication device that lets users access FLYHT’s technology with an iPad. The company changed its name from AeroMechanical Services in 2012. In the three months ended December 31, 2013, FLYHT’s revenue fell 12.8%, to $1.9 million from $2.2 million a year earlier. The company lost $1.4 million, or $0.01 a share, compared to a loss of $621,446, or nil per share.
FLYHT share price pushed up after the disappearance of Malaysia airliner
FLYHT’s shares jumped in March 2014, from around $0.56 to as high as $0.80, before falling to today’s price of $0.61. The rise came in the wake of the disappearance of Malaysia Airlines Flight MH370. The company’s systems would have likely shed light on the airliner’s fate as it disappeared, rather than having to wait for its black box data recorders to be recovered. The stock has attracted interest after the Flight MH370 disappearance, but the extreme rarity of plane crashes makes it unlikely that airlines will rush to install an alternative to the black box for that reason alone. However, FLYHT continues to steadily attract customers and is making sales, including a recent contract to install AFIRS on 218 planes belonging to seven different airlines in China. New Chinese government regulations call for all commercial aircraft to be equipped with satellite communication technology by 2017. In the Inner Circle Q&A, Pat assesses Flyht’s ability to stay ahead of its competition by continuing to spend heavily on research and marketing. He also looks at its prospects of generating substantial revenue. He concludes with his clear buy-hold-sell advice on this stock. (Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members Do you ever buy small cap stocks when a new development (a joint venture, a technological breakthrough, or a big news story like the Malaysian flight) promises to send the stock soaring? How did you identify stocks worth trying? Have you had any big winners with this approach? If you decided to take profits, were you able to identify the best time to sell the stock for the maximum gains?
