Edac Technologies (EDAC)

[littlefish]

I've noticed that with aero companies there are a couple things to look at besides backlog to get some idea of revs growth going forward. First, are they Cap Ex spending to boost machining, tooling capacity? Second, are they hiring? And if they're hiring a chunk of people are they able to maintain margins (training newbies on expensive parts can be a rough start sometimes)?

Of course, knowing capacity to start would help compare them as well. I still think EDAC is slightly out front of the other aero backlogged companies in the arena (SIF, KRSL) because they were spending aggressively on machinery (on a % of revs basis) a year ago and continue to spend, while the others might be doing a bit of catch-up not having spent as much on new machining/tooling. The more backlogged these companies get and the more expansion EDAC does, the more I think EDAC can grow revs at a better clip (barring a downturn in the industry-but with current backlogs it looks like things are really cooking). Just guessing, but it is one strategy I use to figure out which horse to ride.

I own a little KRSL and more EDAC. I don't own SIF so probably am not good at analyzing them other than superficially. But if you look at the numbers in revs for the 3 I'm talking about, you'll see what I'm saying born out in revs over last few Qs. EDAC is leading the revs growth, even with SIF and KRSL holding huge backlogs. So I remain committed to holding my EDAC shares for now (wish I hadn't bailed early after they had the bad Q a couple Qs back, but it'll make for an easy comp YOY when the time comes) and think they hold the most promise in the near term. Good luck!