The Boeing Company (BA), Atlas Air Worldwide Holdings, Inc. (AAWW), Air Transport Services Group Inc. (ATSG): Could These Air Cargo Companies Soar?

The Boeing Company (NYSE:BA)Stock picks with potential to soar should be on the radar of every investor. With that in mind, let’s take a look at two air freight companies. A study by aircraft manufacturer The Boeing Company (NYSE:BA) predicts that in the next two decades, there will be more than a twofold rise in world air-cargo traffic, and the number of aircraft in the freighter fleet will grow by over 80%. The Boeing Company (NYSE:BA), the undisputed leader in air-freighter manufacture, also estimates that air cargo currently generates more than $52 billion in annual revenues, with its growth faster than passenger travel.

Flying freighters gear up

Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is one company which is gearing up to capture greater fortunes in air cargo. Early this year, a unit of this company providing outsourced aircraft and operating solutions in aviation took delivery of its eighth The Boeing Company (NYSE:BA) 747-8 freighter. An additional 747-8F is expected to be delivered to Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) by the end of the 2013 second quarter to complete delivery for a total of nine aircraft.

Meanwhile, completion of the deliveries should contribute in grooming the feathers in Boeing’s cap which were ruffled by the FAA’s grounding early this year (lifted this April) of the passenger aircraft The Boeing Company (NYSE:BA) Dreamliner 787. Despite this debacle, analysts’ sentiments remain bullish on Boeing, which reported a strong 2013 first quarter across its businesses, resulting in a 24% increase in core EPS (non-GAAP) to $1.73.

Added confidence-builders for investors are the 209 net orders that The Boeing Company (NYSE:BA)’s Commercial Airplanes booked during this year’s first quarter. The company now has a backlog of more than 4,400 airplanes worth a record $324 billion. ViaSat also announced this May 16 that it is contracting The Boeing Company (NYSE:BA) to design and deliver one 702HP high-power satellite. Set for a 2016 delivery, the spacecraft will support ViaSat’s broadband services to Internet and mobile subscribers.

An all-Boeing fleet

Like Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), Air Transport Services Group Inc. (NASDAQ:ATSG) has staked its fortune with The Boeing Company (NYSE:BA) air freighters. Its fleet consists entirely of 54 Boeing aircraft, with three added last year. One of the largest customers of Air Transport Services Group Inc. (NASDAQ:ATSG) is express mail service provider DHL Network Operations (USA) for which it deployed four more aircraft this January. Notably, DHL accounted for 53% of Air Transport’s total 2012 revenue of $607.4 million.

With the air freighters added to its DHL customer, Air Transport Services Group Inc. (NASDAQ:ATSG) stands to improve its revenues, which slipped in the 2013 first quarter by 1.5% to $143.3 million year over year. Net earnings for the quarter came in at $8.5 million, or $0.13 a share fully diluted, up 27.6% from a year earlier. Due to its robust fundamentals, the company’s shares rate either a buy or strong buy among Wall Street analysts polled by Zacks. With a 9.21 price-to-earnings ratio and a 14.82% return on equity, Air Transport Services Group Inc. (NASDAQ:ATSG) indeed looks inviting.

Guidance up for Atlas Air

Riding on the wings of Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) can likewise be attractive as the company reported a net income of $5.9 million or $0.22 earnings per share for the first quarter of 2013. Revenue rose 5% to $377.3 million and operating income rose 10% to $22.6 million for the period. The company has also raised its expected adjusted 2013 earnings to $4.80 per share from $4.65, following the implementation of its $36.5 million share repurchase program this April. Its price-to-earnings ratio of 8.87 and 11.51% return on equity should also look lustrous, particularly to value investors.

Strong industry fundamentals

Summing it up, taking up positions on Air Transport Services Group Inc. (NASDAQ:ATSG) and Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is warranted not only by their sound metrics but also by the air freight industry’s strong fundamentals. Air cargo will remain as indispensable as surface transport with the many industries requiring efficient delivery of perishable goods and time-critical items. Industry growth drivers can likewise be expected from projections of stable oil and jet-fuel prices and an average 3.2% growth in the world economy in the next 20 years.

The article Could These Air Cargo Companies Soar? originally appeared on and is written by Arturo Cuevas.

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