Out Fox The $treet

After the financial crisis, numerous financial related stocks traded at prices below book values due to the fears in the accuracy of their reported balance sheets. In the years since the crisis, most of those fears have disappeared yet many financial stocks haven’t regained the valuations suggested by the improving asset bases. A prime example exists in the airplane leasing sector where the majority of the stocks trade below more » Disclosure: Long AER. Please review the disclaimer page for more details. 

The airplane leasing sector has been promising for a while now as emerging markets expand air traffic and airlines with weak balance sheets look to cut cash outlays for new planes. Its also a much better way to play this trend then to own a airline as they typically struggle to make profits with the fierce competition in the sector yet every time we turn around another company wants to open an airline. Owning one seems like a status symbol similar to a sports franchise except airlines almost always lose value. Airplane lessors on the other hand are typically very profitable. The airplanes typically hold their values and during a period where both Boeing (BA) and Airbus struggle to get new versions out, the planes on hand remain in high demand. Its also an attractive investment because the leases are typically for 5-7 years providing for a consistent return. Unfortunately though the stock prices are not nearly as consistent. Fears of bankruptcies in the industry (leases can be canceled)...