Skip to Content
US Videos

A Deep Discount on This Narrow-Moat Metals Stock

Low oil prices may weigh on Carpenter's energy-industry shipments but are unlikely to disrupt its sticky aerospace business.


Andrew Lane: For Carpenter Technology (CRS), we think concern about the impact of low oil prices provides an attractive entry point to a compelling secular-growth story. Carpenter is a manufacturer of specialty metals with considerable exposure to the commercial aerospace end market. Its portfolio of high-value alloys, stainless steels, and titanium products provides the benefits of lightweighting and strength as well as resistance to heat and corrosion.

As the composition of the commercial-aircraft fleet moves toward a higher proportion of very large, next-generation models, the average shipset content of Carpenter's high-value materials will increase. This should allow the company's sales growth to far outpace the 3% to 4% annual commercial-aircraft delivery growth that we forecast through the end of the decade. Due to a more favorable product mix and the benefits of operating leverage as production volumes rise, we expect operating margins to expand from 8% to roughly 14% in a midcycle environment.

Andrew Lane does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.